tf0n0r^ssJ0tia 


FIFTY-THIRD   OONaHESS, 


ir 


The  Currency. 


SPEECH 


HON.  EOBEKT  ADAMS,  Je., 

of  pennsylvania, 
In  the  House  of  Eepresentatiyes^ 

Thursday,  January  3, 1895. 

The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8149)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes — 

Mr.  ADAMS  of  Pennsylvania  said: 

Mr.  Chairman:  The  numerous  resolutions  and  memorials  which 
I  have  received  from  my  district  make  it  incimibent  on  me  to 
enter  a  protest,  as  their  Representative,  against  the  passage  of 
this  bUl. 

What  is  demanded  by  the  manufacturing  and  business  interests 
of  the  district  which  I  have  the  honor  to  represent,  and  what,  in 
my  opinion  the  country  at  large  needs,  is  rest;  peace  to  continue 
their  avocations  and  to  develop  the  resources  of  our  country. 

Ever  since  the  incoming  of  this  Administration — and  I  speak, 
sir,  in  no  partisan  sense — our  country  has  been  in  a  state  of  finan- 
cial and  business  turmoil.  The  silver  question  for  sis  long  raoiith^. 
agitated  this  country,  until  it  was  finally  settled  by  the  patriotic 
efforts  of  the  men  of  both  political  parties. 

No  sooner  was  this  question  removed  from  the  arena  of  agita- 
tion than  the  tariff  question  was  precipitated  upon  the  country, 
and  again  business  waited  in  suspense  to  see  what  its  outcome 
would  be. 

At  the  adjournment  of  the  first  session  of  this  Congress  last 
August  a  spirit  of  business  revival  began,  the  people  took  heart, 
the  mills  opened,  some  employment  was  received,  and  the  outlook 
was  more  propitious,  at  least  for  a  time.  But  no  sooner  did  this 
session  of  Congress  assemble  than  the  party  in  power,  which  is 
responsible  for  its  direction,  precipitated  another  issue  into  the 
halls  of  legislation,  which  has  again  brought  business  to  a  stand- 
still and  made  people  halt  and  wait  before  entering  into  any  new 
financial  relations. 

What  is  the  necessity,  sir,  for  the  introduction  of  this  measure 
at  this  time?  It  is  claimed  that  our  currency  lacks  those  qualifi- 
cations which  tend  to  business  prosperity  and  that  that  is  the 
necessity  for  this  measure. 

There  are  three  qualifications  which  seem  to  be  universally  ad- 
raitted,  which  tend  to  form  a  sound  currency.  The  first  is  secu- 
rity, the  second  is  uniformity,  and  the  third  is  elasticity. 

Great  should  be  the  pressure  to  force  this  question  upon  the 


Further'  '< 
With  $10Cl 
which  car^l 
pressure  i  g 
fore,  sir,  ] '" 
but  the  a^  J 
the  distri(T-^ 
are  busin 
those  of  a^ 

Sir,  if  ifct 
tion  should 
are  begin:i* 
ienced  dr^ 
questions  d 
mercantil''' 
What  do 
the  histor» 
prices  of  <i 
facturerst 
touched  tt 
way  shall 
railways  i' 
bond  anda 
1892-93  tl( 
to  July.    ■ 
period  off 
making  a 
tons  in  tl* 

Let  us ' 
bill  into  1 
and  unde 
clared  to 
niinoritv 
it  in  com 

Mr.  SL 
question 
go  along 
understo 
cents  a  tc 
does  the 
or  to  the 

Mr.  a: 
part  of  tj 
the  mine 

Mr.  SI 

Mr.  a: 
own  the 

Mr.  SI 

Mr.  A 

Mr.  SI 
understf 
fallen, 
reduced 
dition  o\ 

Mr.  A 
whom  t] 


d^ongrij^s tonal  il^covd 


% 


FIFTY-THIRD   CO^SrOEESS,  THIRO  SESSIO:iSr. 


HON.  ROBERT  ADAMS,  Jr., 


;  House  of  Represent atives, 

Thunday,  January  3, 1895. 


Mr.  ADAMS  of  Peimaylvania  said; 

Mr.  Chairman:  The  numeroas  resolutions  and  memoriale  which 
I  have  received  from  my  district  make  it  incimibent  on  me  to 
enter  a  protest,  as  their  Representative,  against  the  passage  of 

What  is  demanded  hy  the  manof  actoring  and  bnsiness  interests 
of  the  district  which  II"* 


ion  the  c 
Bthei 


ntry  at  large  needs,  i 


o  represent,  and  what,  i 


0  partisan  sense — oar  conntry  has  been  in  a  state  of  flni 
ciij  und  business  tnnnoil.    The  silver  quectica  for  six  1;.::^  dCi^Ih., 
agitated  this  conntry,  nntil  it  was  finally  settled  by  the  patriotic 
efforts  of  the  men  of  both  political  parties. 

No  sooner  was  this  question  removed  from  the  arena  of  agita- 
tion than  the  tariff  question  was  precipitated  upon  the  country, 
and  again  business  waited  in  su^ense  to  see  what  its  outcome 


AugTist  a  spirit  of  business  revival  began,  the  people  took  heart. 


I  of  this  Congress  last 
"  e  people  took  heart, 
red,  and  the  outlook 
lore  propitious,  at  least  tor  a  time,    iiut  no  sooner  did  this 
Q  of  Congress  assemble  than  the  party  in  power,  which  is 
isible  for  its  direction,  precipitated  another  isane  into  the 
)f  legislation,  which  bas  again  brought  business  to  a  stand- 
still and  made  people  halt  and  wait  before  entering  into  any  new 


J  introduction  of  tl 


financial  relations. 

What  is  the  ,  

at  this  time?  It  is  clauned  that  our  cnrrency  lacks  those  qnalifi- 
catioDS  which  tend  to  business  prosperity  and  that  that  is  the 
necessity  for  this  measure. 

m'tted,  which  t 

i  .ty,  the  second  is  uniformity,  and  the  third  is  elasticity. 


)  press  this  questioi 


s  been  removed  by  the 


C  legislation  at  the 
i  being  based  upon 


of  the  Treasury  n 


snrely  that 
reasury  un- 
.000  of  bonds  having  been 

' lan  foresight  can  see. 

the  exigencies 


Therefore,  the  lack  of  security  .     

-f  ii.itional-hank  notes  is  removed,  at  least  for  the  present. 
■oml  qualification,  that  of  unifonnity,  is  surely  not  going 
by  theprovisions  of  this  bill.  I  will  refer  to  that  further 
;  is  sufficient  to  refer  simply  to  the  one  fact,  that  tl 


3  Stat«  banks  t 


existence. 


o  the  vaults  of  the  banks  of  New  York, 


but  the  agitation  of  this  i 
the  district  which  I  have  tl 
are  business,  mercantile. 


1  protest  not  only  against  the  passage 

aeaatire  at  this  time,  in  the  interest  of 

■  to  r^-preaent.  in  which  there 

Dufacturing  interests  equal  to 

Q  pressing  form,  this  qnea- 


ienced  during  the  past  year,  i 


untry  at  this  ti 

I  we  have  aln 

the  panic  of  1893, « 


which  I  have  referred  hi 
mercantile  and  business  returns  for  1894  are  beginning  t< 
What  do  they  show?    The  largest  increase  in  the  nation 
the  history  of  our  country  in  a  time  of  peace  has  been  made.    The 
prices  of  commodities  have  fi "      ■-■■'- 


I  the  national  debt  ii 


7  shares  has  fal 


7,000.0 


bond  and  share  holders  J15.000.000  ot 

1892-03  the  bank  clearings  decreased 

July.    Since  then  tbey  have  gained 


As  compared  with 

T  cent  monthly  up 

0  percent  over  the  panic 


8  and  a  loss  of  1,500,000 


13-03  the  bank  clearings  decreased 
._  July.  Sincethentbeyhavegained 
period  of  that  year.    Coal  has  averaged 

.,._.._  , •'^'^  000,000  to  the  prc^- 

compared  with 
at  necess;' ' 
the  halls  of  Congress 

e-liberative  a  way  thai 

clared  to  be  held  personally  re^ionsible  for  its  provisions  and 


[akinga  loss  of  820,000,000  to  the  produ. 
"     "        itput  as  compared  with  1893. 

ider  what  necessity  required  the  introduction  of  this 
lalls  of  Congress  at  this  time  and  in  so  precipitate 
and  un deliberative  a  way  that  the  majority  of  the  c 
"      "     "    "  lally  responsible  for  its  provi 

accorded  the  wsnal  privilege  of  d'snnf"nn| 


Mr.  SIMPSON.  Will  the  gentleman  ^ow  me  to  ask  him  a 
question  right  there?  I  want  to  understand  this  matter  as  we 
go  along,  I  t^e  a  deep  interest  in  it.  The  gentleman  said,  if  I 
understood  ^'"1  right,  that  the  decline  in  the  price  of  coal  of  5 


i  people  who  form  a 


Mr.  SIMPSON.  You  mea 
Mr.  ADAMS  of  Pennsylv 
iwn  the  railway  shares  and 
Mr.  SIMPSON.  Oh,  that 
Mr,  ADAMS  of  Pennsylvi 


They  have  lost  also. 


)  the  people  upon  whom  these  losses  have 


reduced  BOc 
dition  of  a 


,t  QBs  been  a  loss  to  the 


■.  ADAMS  of  Pennsylvania.     I  will  tell  the  gentler 


whom  t'le  loss  falls.  Like  all  those  of  his  party  he  wishes  to  speak 
as  repre  .eutiug  a  single  class;  but  when  you  come  to  legislate  for 
these  great  United  States,  you  have  got  to  consider  all  sorts  and 
conditions  of  men,  and  you  have  got  to  consider  the  capitalist  and 
the  miner  and  the  consumer;  and  I  will  tell  the  gentleman  that 
when  the  producer  is  hard  up,  he  has  that  n 
and  it  permeates  through  t 


a  whole  country  and  reaches  e 


Mr.  SIMPSON.     I  just  -w 


if  the  gentleman  from  Pei 
J  make  a  snggestion.    It  o 


if  the  gentleman  from  Penn- 


Mr.  SIMPSON. 


e  that  he  be  allowed  ti 


e  belongs  to  the  gentleman  from 


t  that  hiAtJme  b«  extended? 


# 


The  CHATRHAN.    The  time  reverte  to  the  gentleman  from 
nijnois  (Mr.  HEitDERsON] ,  if  he  claims  the  floi 


CONGRESSIONAL  EECOED. 


Mr.  HENDERSON  of  iuinois.    I  : 


)  the  balance  of  my 


The  CHAIRMAN.    The  gentleman  from  Peunsv    am 
Dalzell]  asks  unanimoas  consent  that  the  time  of  'his 
be  extended  ten  minntes.    Is  there  objection? 
There  was  no  objection. 

Mr.  PENCE.    I  ask  that  it  be  made  twenty  minutes 
The  CHAIRMAN.     The  gentJeman  only  asks  ten 
Mr.  PENCE.    I  ask  that  he  may  have  twenty  minute       I  h      d 
the  gentleman  from  Pennsylvania  [Mr.  Adams]  say  h    w  uld  ik 
twenty  minutes. 

The  CHAIRMAN.    The  gentleman  from  Colorado  [Mr  Pen  e 
asks  unanimous  consent  that  an  additional  ten  minute        tw  n 
mmutes  in  all,  be  given  to  the  gentleman  from  Pennsj     ama  M 
Adams]  .    Is  there  objection? 
There  was  no  objection. 

Mr.  SIMPSON.  Now.  Mr.  Chairman,  I  hope  the  gentl  man  wiE 
yield  to  me  for  a  question. 

Tlie  CHAIRMAN.    Does  the  gentleman  yield  to  the  k  n     m 
from  Kansas? 

Ml-.  ADAMS  of  Pennsylvania.  I  want  to  be  conr  ua  If 
have  the  amount  of  time  I  will  jield  to  thegentleman  bu  I  w  n 
to  conclude  n^  remarks. 

Mr.  PENCE.    Then  I  withdraw  the  ten  minutes  I  a^k  d 
[Laughter.] 

The  CHATRMAN".  The  gentleman  from  PennBvlvania  is  enti- 
tled to  control  his  time. 

Mr.  ^AMS  of  Pennsylvania.  I  yield  one  minute  to  the  gen- 
tleman from  Kansas.  ° 

Mr.  SIMPSON.  Mr.  Chairman,  X  am  with  the  gentleman  in 
oppoMliuii  t'l  flii'^  hill  I  understand  his  argument  was  that  be- 
cause I.I  iii\'  h.  Iniiuiiju-  tr>  a  particular  party  I  am  in  favor  of 
aspHci:iI  rl:r-.,  I ,.),],  it  to  that,  and  desire  to  refute  it.  I  am  in 
fav..r  ..t  all  rhKs^s.  X,,w,  when  the  gentleman  said  that  a  re- 
dnction  m  the  price  of  coal  of  50  cents  a  ton  was  a  great  calamity 
to  the  people  of  this  country  it  occurred  to  me,  inasmuch  as  the 


viem't^T^^-    £«^  ^^^  gentleman  from  Pennsylvania 
yield  to  the  gentleman  from  New  York?  ""ayivania 

Mr.  ADAMS  of  Pennsylvania     Not  just  now     I  must  d    line 


This       ul 
ti      di  turban 

I     W\RNER      WUhtnmanvid      w 

Th    CHAIR!  4JT     D  ea   fi^  g  n     m  n  v?  dto  h    ^  n   ««,«« 


UN  \ 
5 
T 
1       T 


Mr  WAKNEE     H  wm 
Ml   ADAMS    f  P  nnay 


ma     I     nn     yi    a 

m  nd  toyi    i 

W    will  urn       time 


hha      h  y    (lu    dwa^^ea— 50  ents 
n     answ        I  suppose 


..^.... ...  .._™,  ^^^,^  Hfloiium  L-aiamity,  ana  cnat  it  was  reaUv 

1  tliL<  interest  and  for  the  benefit  of  the  general  public.  I  merely 
..i-tlfi  tin-  MiK'gestion  in  order  to  prevent  him  from  putting  me  in 

-Mr  A 1  L\  MS  of  Pennsylvania.  I  wiU  answer  the  gentleman  bv 
-r.ti],.;  ih,,i  u-hilethe  consumer  maybe  benefited  by  the  reduc*- 
ii.ju  111  til.  i>iKe  of  coal,  it  would  bring  the  miners  to  stan'ation 
wiigt-s;  and  if  he  should  \-iBit  the  State  which  I  have  the  honor  in 
part  to  represent  he  would  find  that  there  were  thousands  of 
miners  whom  this  reduction  of  50  cents  a  ton  in  the  price  of  coal 
senoush-  affects. 

Mr.  PENCE.  WiU  the  gentleman  permit  me  to  ask  him  a 
question?  ^^ 

Mr.  ADAMS  of  Pennsylvania.    Tea. 

Mr.  PENCE.  Did  not  this  condition  of  starvation  wages  for 
Hungarians,  unported  as  miners,  exist  before  any  reduction  in  the 
taiiff  upon  coal? 

Mr.  ADAMS  of  Pennsylvania.  No,  sir.  These  people  were 
weU  off  and  happy  and  Uving  well,  and  we  had  no  diatirbances 
ot  any  kind,     fljaughter  and  jeers  on  the  Democratic  side.l 

Now.IwoiUdbietoask  the  gentleman  from  Kansas  a  Ques- 
tion; and  that  IS,  it  the  present  value  of  wheat  does  not  bear  the 
same  relation  to  the  producer  and  the  consumer  as  the  price  of 

Mr.  .SIMPSON.  Mr.  Chairman,  I  would  say  yes;  that  it  cer- 
tainly does,  and  it  ought  to  under  certain  conditions,  but  that 
under  our  present  system  governing  transportation,  and  the  low 
jince  of  wheat,  after  it  passes  through  the  hands  of  mononolv— 
the  mUimg  and  railroad  monopolies-unfortnnately  the  consumers 
uo  not  get  the  benefit  of  it. 

«■■•  P.ftHSS''-    ^'  """'  "="'  true  of  coal  also? 

?5'-  WFSS^:  i'  "  '"'Sely  true  also  ot  coal. 

Mr.  ADAMS  of  Pennsylvania.  The  gentleman  has  now  an- 
irf  w.^SS™'"™  '{"(tteimttome  in  regard  to  coal  himself, 
and  after  hu  answer  it  is  nof  necessary  thatl  should  go  any  fur^ 

q^^?^^^'    "^"^  '^°  gentleman  aUowme  to  ask  him  a 
^.  ADAMS  of  Pennsylvanio.    H  the  House  will  e^end  my 

^-  ?SK?9^i  J°^  *^'  •"*  •'««■  eitended. 
^^ADAMS  of  Pennsylyania.    I  really  want  to  fini  sh  my  re- 


Mx.  WABNEB.    Ten  cents? 
Mr.  ADAMS  of  Pennsylvania.    Thevarpinli'Tio  wjfi.  «.«  ,..=*    e 
the  sn«erers  and  governed  b™the  S'mrc™dMons"SchV^er°n 
5<°'^»?4S"°5  "^  "  ''"Vaih  upon  freight  charges. 

Mr  w/^°J  Pennsylvania,    I  can  not  answer  that  question. 

m^e  to  thf™  impression  is  that  there  was  no  reduction 

mS:,nSf^^  o^'Pennsylvania.    There  has  been  a  reduction 

I,     w  .  J.^JS?''*'    I  <io  not  claim  to  the  cvtcnt  of  50  cents  a  ton 

Mr.  WARNEK.    Has  there  been  any  reduction  since  the  price 

of  coal  has  been  falling?  .uo  i"n-^ 


Mr.  ADAMS  of  Pennsylv 


Yes,  s 


Mr.  WARNER.    How  much? 

£•  ^i^l,?H  Pennsylvania     Coal  is  50  cents  a  ton  cheaper. 

Mr.  WARNER.  Has  there  been  any  reduction  recently  in 
Pennsylvania  in  the  price  of  labor  per  ton? 

i,    :^^^^  °'  Pennsylvania.    What  do  you  mean  by  recently 

ir/'  ;  ATiS   ,°4  Indiana.    Since  the  enactment  of  the  tariff  law, 

Mr.ApAMSofPennsylvama.  Certainly  not.  If  the  gentleman 
had  paid  attention  to  what  I  was  savine 

Mr.  WARNER.    When  was  the 

Mr.  ADAMS  of  Pennsylvania.  Onemoment.  If  the  gentleman 
from  New  York  had  paid  attention  to  what  I  was  saying— I  dare 
"^V  S°.  S'2™''"',?  ?'  •"*  ^eat  attention— but  if  he  had 

Mr.  WARNER.    It  is  going  to  be. 

Mr.  ADAMS  of  Pennsylvania.  WcU,  if  be  had  paid  attention 
he  would  have  seen  that  1  was  simply  calling  attention  to  what 
tnis  agitation  has  cost  our  country  in  the  past  and  was  quoting 
the  statistics  from  Dun.  I  was  not  giving  them  as  my  own  hut 
giving  them  as  Dun's  statistics  that  had  come  in  at  the  close  of 

Mr.  WARNER.  If  I  understood  the  gentleman,  he  said  that  the 
people  of  this  country  have  been  getting  coal  50  cents  per  ton 
cheaper  tbau  before  the  passage  of  the  Wilson  bill,  but  he  com- 
plamed  (and  in  that  I  sympathize  with  him)  that  perhaps  some  of 
the  poor  miners  had  been  getting  less  for  their  work  than  they 
had  received  before.  Now,  I  wanted  to  ascertain  from  the  gen- 
tlem,-in  how  much  the  miners  had  had  to  lose  per  ton  in  order  to 
enable  the  people  to  get  their  coal  50  cents  per  ton  cheaper.  I  was 
sunjily  a.slnng  for  inlormation. 


Mr.  ADAMS  of  Pennsylvania.  I  \vill  answer  the  gentleman 
aom  the  impers  of  this  morning,  which  announce  that  one  of  the 
largest  coUienes  in  Pennsylyama  has  been  compelled  to  shut  down 
,iiid  throw  its  men  out  of  employment  because  there  is  no  mar- 
ket for  the  coal. 

Mr.  WARNER.  Have  there  been  as  many  collieries  shut  down 
this  winter  as  there  were  the  winter  after  the  McKinley  bill  was 
passed? 

Mr.  ADAMS  of  Pennsylvania.    Yes,  air, 

Mr.  WARNER.    Has  the  gentleman  any  facts  on  that  subject? 

Mr.  ADAMS  of  Pennsylvania.  Mr.  Chairman,  I  can  not  go  on 
answenng  the  gentleman's  questions  all  day.    I  try  to  he  cour- 

Mx.  WAENEB.    I  simply  wish  to  ask  the  gentleman  whether 


(^ 


I  lBt0r(t. 


s 


THIRO  SESSION.  M^ 

jst 

more,  the  reason  of  elasticity  is  not  pressing  at  present.  ^ 

1,000,000  lying  in  the  vaults  of  the  banks  of  New  York,  i  : 

I  not  be  loaned  out  at  1  per  cent,  there  is  no  immediate  ^ 

a  regard  to  this  qualification  of  our  currency.     There- 

;  repeat,  I  rise  to  x>i'otest  not  only  against  the  passage 

fitation  of  this  measure  at  this  time,  in  the  interest  of 

;t  which  I  have  the  honor  to  represent,  in  which  there 

ess,  mercantile,  and  manirfactm-ing  interests  equal  to 

ny  district  of  the  United  States. 

his  necessity  does  not  exist  in  pressing  form,  this  ques- 

d  not  be  precipitated  upon  the  country  at  this  time.    We 

aing  to  realize  what  the  agitation  we  have  already  exper-  , 

iring  the  past  year,  since  the  panic  of  1893,  on  the  two  \} 

to  which  I  have  referred  has  cost  this  coimtry.    The 

e  and  business  returns  for  1894  are  beginning  to  come  in.  f 

they  show?    The  largest  increase  in  the  national  debt  in  * 

y  of  our  country  in  a  time  of  peace  has  been  made.    The 

jommodities  have  fallen  to  the  ruin  of  farmers  and  manu- 
Iron  has  fallen  $1.50  a  ton  and  wheat  and  cotton  has 

he  lowest  point  on  record.    The  values  of  the  leading  rail- 

es  has  fallen  $125,000,000  and  the  net  earnings  of  136  P 

decreased  $37,000,000  as  compared  with  1892,  costing  the 

share  holders  $15,000,000  of  income.    As  compared  with 

le  bank  clearings  decreased  15  to  36  per  cent  monthly  up 

Since  then  they  have  gained  3  to  6  per  cent  over  the  panic 

that  year.    Coal  has  averaged  about  50  cents  a  ton  less, 

loss  of  $20,000,000  to  the  producers  and  a  loss  of  1,500,000 

e  output  as  compared  with  1893. 

consider  what  necessity  required  the  introduction  of  this 

;he  halls  of  Congress  at  this  time  and  in  so  precipitate 

libera  five  a  way  that  the  majority  of  the  committee  de- 
be  held  personally  responsible  for  its  provisions  and  the 

was  not  even  ?.ccorded  the  visual  pri\nlege  of  d^snus^ing 
mittee. 
MPSON.    WUl  the  gentleman  allow  me  to  ask  him  a 

right  there?  I  want  to  understand  this  matter  as  we 
I  take  a  deep  interest  in  it.  The  gentleman  said,  if  I 
Dd  him  right,  that  the  decline  in  the  price  of  coal  of  50 
■n  was  that  much  loss  to  the  people  of  this  country.  Now 
gentleman  mean  loss  to  the  people  who  produce  the  coal, 

people  who  consume  it? 

DAMS  of  Pennsylvania.    I  mean  the  people  who  form  a 

16  population  of  this  country  to  the  extent  of  thousands — 

rs. 

MPSON.    You  mean  the  people  who  mine  the  coal? 

DAMS  of  Pennsylvania.    And  I  mean  the  people  who 

railway  shares  and  the  bonds? 

MPSON.    Oh,  that  is  it? 

DAMS  of  Pennsylvania.    They  have  lost  also. 

MPSON.    That  is  what  I  want  to  get  at.    I  want  a  fair 

.nding  as  to  the  people  upon  whom  these  losses  have 

K  it  has  been  a  loss  to  the  consumers  of  coal  to  have  it 

50  cents  a  ton  in  price,  I  am  surely  shocked  at  that  con- 

■  affairs. 

DAJMS  of  Pennsylvania.     I  will  tell  the  gentleman  upon 

le  loss  falls.    Like  all  those  of  his  party  he  wishes  to  speak 

•o-ntiTirr  a  sincle  class;  but  when  you  come  to  legislate  for  '^ 


CONGEES! 


his  rnately  they  will  be  lost  or  destroyed,  thus  enhancing  their 

he  i  at  the  cost  of  the  people. 

per  National  banks  are  required  to  receive  each  other's  notes 

]V  tlement  of  any  liability.     State  banks  are  not.     National 

dov  must  make  reports  five  times  a  year  to  the  Comptroller, 

on  banks  need  not.     National  banks  are  required  to  report 

M  same  ofl&cer  their  dividends  declared  and  profits  in  excess 

era  dividends.    State  banks  are  not.    National  banks  are  subjf 

M  visits  by  examiners  to  look  into  their  affairs.     State  banks  i 

con  National  banks  are  restricted  to  one-tenth  of  their  capital 

plai  one  loan  and  forbidden  to  loan  on  their  own  stock  as  col 

'M  State  banks  are  not.    A  national  bank  retiring  or  reducing 

Mc]  culation  receives  no  rebate  from  the  safety  fund  of  the  i. 

M  it  had  paid  in  to  secure  the  said  circulation  about  to  be  5 

a  di  which  constitutes  a  loss.    A  State  bank,  having  made  no  su 

ing]  tribution  to  the  safety  f mid,  can  incur  no  such  loss, 

son  These  provisions,  so  discriminating  in  favor  of  State 

M  would  ultimately  drive  the  national  banks  out  of  existt 

Mel  force  them  to  reorganize  under  the  State  laws  and  thus 

M  the  people  the  value  of  the  safety  f^md  as  provided  in  tht 

title  as  national  banks.     The  two  facts  that  State  banks  are  r 

M  of  the  1  per  cent  tax  and  the  mutual  liability  for  failed 

thea  place  them  at  a  disadvantage  as  compared  with  national 

glac  under  this  bill. 

TJ  Mr.  Chairman,  the  debate  already  had  on  this  bill  has  so 

yeai  strated  its  impossibility  as  a  practical  measure,  and  so  nu 

neec  are  its  faults  that  amendment  was  out  of  the  question,  t 

and  committee  has  offered  a  substitute.     The  changes  amount 

enti;  little  and  offer  even  further  objections  to  this  bill.     The  r 

that  of  the  compulsion  upon  the  national  banks  to  come  in  un> 

Gren  pact  or  ermitting  them  to  retain  their  bond  deposit  as  seen 

ban]  circulation,  as  at  present,  is  done  to  avoid  the  catastrophe  ( 

behi  000,000  of  Government  bonds  being  thrown  upon  the  mar 

then  brealdng  down  the  credit  of  the  Government  in  the  hopt 

Ev'l  slower  change  would  avert  that  damage.     That  this  will  be 

tl'    1  already  demonstrated  by  the  fall  in  price  on  the  market  of  < 

r  ment  bonds,  and,  as  I  have  already  endeavored  to  show,  the  i 

1T45 


CONGRESSIONAL  RECORD. 


c 


i  based  on  a  general  eat  m    e        t  in 
he  really  knows  the  facts.    Hiive  you  tl  e  Dun  a  at 
period  also? 

Mr.  ADAMS  of  Pennsylvania.  The  coll  enesha 
down  eversiiicethe Democratic  party  tanib  ntopow 
on  the  Republican  side.] 

Mr.  WARNER.    Weretheynotehuttrngdownb  f 
cratic  party  came  into  power? 

Mr.  ADAMS  of  Pennsylvania 
continnes  in  power  they  will  al' 
plaose  on  the  Repablican  side.  ] 

Mr.  WARNER.    Were  not  more  of  them  shut  do  v 
McKinlej  bill  than  there  ever  have  been  e  nee 

' '    ?  Penusylv!  "" 

_  the  passdfee 
e  b  "^n  lo  mj,  \s  ages  e 


needs  of  the  countrj  so  veil  that  we  should  mo 
and  with  del  beration  in  making  changes  let  a 
intirely     The  holder  of  a  national  bank  i 


ndsfor  the  very  gold  t< 


e  would  at  least 


:  al  gold  c  ^   ,  

he  Treasury  thii  'sellmg  them  m  New  York 
n  be  withdrawn  withm  t  venty  four  hours. 
i  a  fore  gn  supp  j  pat  such  difficoltiea  around 


1  as  veil  as  thej  do  The  balau<^  of  trade 
and  yet  $7  OOO  000  in  gold  has  flovra 
ve  allow  fore  gne  8  to  recoup  heir  gold 
it  CO        \     nnd  Pans  andS    Petersburg 


that  it  18  secured  by  a 
General  Government  a 


a  ted  S  ate    b.  nd. 

■  at      hat  di     n  e  l 
t,  for  the  fa  th  of    he  C     er 


behind  it.  It  is  this  characteristic  n 
them  received  in  all  sections  of  our  countrv  ' 
Even  when  bomed  or  partially  destroyed  they  i 
their  full  or  partial  value  as  the  presenter  is  able  t 

man  has  ever  lost  a  dollar  thi-ough  the  worthless! 

a  national  bank  which  has  failed,  while  the  liability  ■ 


1  State  banks  they  make  one  r 

f  thisq 
I  espe    ally  a 

■f  C  nfcTess  when  the  hairman  of  tte  i 
'kJ  led  the  opposition  to  repeal  the  10  per  cent  tax  on 
kg  whi  h  waa  def  a  ed  bv  a  vote  of  10  to  1  against 
U  and  w  now  beho  d  the  same  gentleman  reverting  his 
liid  sustaining  this  feature  of  &e  bill.  Sir,  a  greater 
I  ijould  not  bef^  our  country  than  a  return  to  the  systei 
(ii:  under  the  State  laws.    When  this  subjectw 


holders  to  the  additional  a 


it  of  the  value  of  th'-i 


t  under  coiudderatiou  calls  for  a  deposit 
of  30  per  cent  of  the  issue  of  notes  to  be  made  in  legal  tender  and 
Treasury  notes  of  the  act  of  July  14,  1800.  In  addition  a  tax  of 
one-half  of  1  per  cent  on  the  average  circulation  is  to  be  paid  by 
each  bank  until  it  amounts  to  5  per  cent  of  all  the  national-bank 
notes  ontstanding.  Should  this  security  be  insufficient,  aU  the 
solvent  banks  are  to  be  assessed  pro  rata  to  make  up  the  deficit. 
To  my  mind  this  is  offering  a  premium  on  illegitimate  and  specu- 
lative formation  of  banking  ■  '"  ^     .     .  . -- 


d  f  doubt  if  prudently 
t  system  which  holds  them 


)  favorable  provisions  relating  to  the  establishment  of 
)  the  $150,000,000  of  national  bonds 


This  bill,  by  allowing  the  establish] 


« the  basis  of  security,  do 


3  the  laws  of  the  i 


Therefore,  Mr.  Chairman,  I  c 


1  the  fear  of  insnfHciei 


available  for  leposit  for  national  bank  notes,  and  s 


Thebest  eridence  of  the  hur 


r  and  Treasury  noteS; 


or  their  redemptioi 


t  the  $100,000,000  i 


E  the  dra  n  of  the  gold 


June,  I  brought  and  exhibited  to  the  House  a  copy 
-im's  Bank  Note  Detector,  a  more  fore* ' 
lieenexliibitedof  theevilsattending  thee: 
It  waa  a  necessary     •  ■        -  -  "- 

■  ed  over  the  counter,     i  nere  is  notniUL. 
safe  the  security  of  the  note  issue  of  State  bunks 


)  forcible  proof  could 

„  theexist^nceof  f   ' 
(very  office  of  every  s 
narket  vale      ' 
s  nothing  i 


e  the  market  value  of  € 


posited  with  the  Treasurer  of  ttie  United  States,  but  with  some 
&t=+^  officer  designated  by  State  law.    No  provision  ia  made  that 


i  security  for  its  circulation; 


current  funds.  "The  banks  of  the  different  States 
ill  exist  under  the  laws  of  the  several  States,  thus  making  as 
any  different  kinds  of  currency  as  the  said  laws  may  differ,  and 

The  ol^ect  of  this  bill  is  to  reestablish  the  wild-cat  banking  sys- 


;,  and  wh(>n  it  goes  they  go,  and  v 


t  deposit  held  by  the  State  and  find 

same  bank,  their  notes  of  issue  will 

I  pajier  and  the  bank-note  detector  in  its 


11  report  them  as  of  no  vali 


and  wind  np  the  affairs  of  these  banks?   No 


State  laws  for  their  ( 


.fa25pei 
r  the  dep 


oldei-s  are  only  liable 


as  security  for  t _.,, —     -  .,  - 

to  the  extent  of  their  stock,  and  no  assessment  funded  as  under  e: 
isting  national-bank  law.     Under  this  bill  national  banks  c 

sue  no  notes  under  $10,  while  no        -.-     -> 

the  issues  of  State  banks.    This  ii 


c 


• 


CONGRESSIONAL  RECORD. 


mately  they  will  be  lost  or  destroyed,  thns  enhancing  their  profits 
at  the  cost  of  the  people. 

National  banks  are  required  to  receive  each  other's  notes  in  set- 
tlement of  any  liability.     State  banks  are  not.    National  banks 
t  make  reports  five  times  a  year  to  the  Comptroller.    State 
" ---'  't  report  to  the 


dividends.    State  banks  are  not.    Nation     b  nks  a 
\isit3  by  esaminers  to  look  into  their  affair       Sta 
National  banks  are  restricted  to  one-ten  h        h  ir 
one  loan  and  forbidden  to  loan  on  the       wo 
State  banks  are  not.    A  national  bank  r  tirmg 
dilation  receives  no  rebate  from  the  saf  ty  f 
it  had  paid  in  to  secure  the  said  circulati  n    b 
which  constitutes  a  loss.     AState  bank.h  vmgm 
tribution  to  the  safety  fund,  can  incur  n         h 
These  provisions,  so  discriminating  i 


sof  said 


would  ultimately  drive  the  national  b  nk 
force  them  to  reorganize  under  the  State 
the  people  the  value  of  the  safety  f»nd 


w        a    hi 
.     ^d  d  m  1 
_3  national  banks.    The  two  facts  that  nk 

of  the  1  per  cent  tax  and  the  mutual         il  ty 
place  tl^em  at  a  disadvantage  as  compar  d  wi  h  n  ti  nf 
under  this  bill. 

Mr.  Chairman,  the  debate  already  had        his 
etrated  its  impossibility  as  a  practical  mea  ur 
are  its  faults  that  amendment  was  out         h 
committee  has  offered  a  substitute.    Th     h 
little  and  offer  even  further  objections        hi 
of  the  compulsion  upon  the  national  ba  k 
pact  or  ermitting  them  to  retain  their  b  p 

circulation,  as  at  present,  is  done  to  avo  d  h 
000,000  of  Government  bonds  being  thrown    p 
breaking  down  the  credit  of  the  Govemm  n  in 
slower  change  would  avert  that  damage.     Th  wi 

fjready  demonstratedby  the  fallin  price        h  ina  k 
ment  bonds,  and,  as  1  have  already  eudea        d       h  w    h 
1745 


banks  will  be  compelled  to  adopt  the  State  system  under  this  bill, 
as  competition  will  be  impoasible  under  the  burdensome  conditiouH 
placed  upon  them  and  not  upon  State  banks.  Besides,  should  ttiey 
adopt  the  provision  in  the  substitute,  in  this  respect  it  would  add 
"  currency,  which  is  certainly  not  a  step  toward 


uniformity. 
Another  provision  i 


the  substitute  reimposes  the  tax  for  the 


SIOE^AL  EECORD. 


profits 

in  set- 
banks 
State 
to  the 
of  said 
■ctt'd  to 
ire  not. 
in  any 
lateral, 
its  cir- 
uioiint 
•etired, 
ch  con- 
hanks, 
nee  or 
lose  to 
,'ir  case 
elieved 
hanks 
hanks 

losnon- 
UKi'ons 
hat  the 

t-  hut 
enoval 
le"  this 
vi  V  for 
)f?700,- 
lv(t  and 

tiat  a 
fitileis 
Tivern- 
ia:ional 


hanks  will  he  compelled  to  adopt  the  State  system  under  this  hill, 
as  competition  will  he  inipossihle  under  the  hurdensome  conditions 
placed  ui)on  them  and  not  iipon  State  hanks.  Besides,  should  they 
adopt  the  provision  in  the  suhstitute,  in  this  respect  it  would  add 
one  more  kind  of  currency,  which  is  certainly  not  a  step  toward 
luiiformity. 

Another  provision  in  the  suhstitute  reimposes  the  tax  for  the 
safety  fund  the  moment  it  falls  helow  the  5  per  cent  limit  of  the 
whole  circulation,  thus  making  the  national  hanks  perpetually  lia- 
hle  for  the  insolvency  of  the  weaker  ones,  a  hurden  not  imposed  on 
State  hanks,  and  another  clause  provides  that  notes  of  failed  hanks 
shall  hear  6  per  cent  interest  from  date  of  suspension  until  thirty 
days  after  notice  of  their  redemption  is  made,  and  he  a  first  lien 
thereafter  on  all  moneys  received  into  the  safety  fund,  thus  increas- 
ing,' the  liability  of  the  national  hanks.  None  such  imposed  on 
State  banks.  The  last  amendment  in  the  suhstitute  endeavors  to 
drive  the  nail  into  the  coffin  of  the  national  hanks  by  authorizing 
the  Secretary  of  the  Treasury  and  the  Comptroller  of  the  Currency, 
upon  being  satisfied  that  a  State  hank  has  complied  with  the  State 
hanking  laws  and  certain  conditions  imposed  by  this  act,  to  issue 
certificates  to  that  efi'ect,thus  endeavoring  to  give  these  State  cor- 
poi'ations  a  national  character  while  not  imjiosing  the  same  con- 
ditions as  are  meted  out  to  the  national  hanks. 

I  have  thus  endeavored  to  substantiate.  Mr.  Chairman,  my  claim, 
before  advanced,  that  the  real  object  is  to  rehabilitate  the  system 
of  State  banks.  The  i)eople  have  a  great  interest  in  this  qxiestion, 
far  in  excess  of  the  bankers,  who  with  their  knowledge  of  the  value 
of  different  issues  of  notes  can  always  protect  themselves.  Indeed, 
large  fortunes  were  made  in  discounting  the  notes  of  the  various 
States  to  the  loss  of  the  innocent  and  hard-working  o'wners  who 
had  received  them  in  pa>niient  (jf  their  services.  No  such  loss  has 
been  incurred  by  any  man  under  the  present  banking  system,  and 
we  should  proceed  with  much  more  deliberation  than  has  been 
accorded  this  measure. 

Mr.  Chairman,  this  whole  question  should  be  relegated  to  a 
commission  to  report  to  the  incoming  Congi-ess. 

[Here  the  hammer  fell.] 


•o-n+HTi>r  a  sinele  class;  but  when  yon  come  xu  i«giaiow3  >.kjl 


THE  CARLISLE  CURRENCY  BILL 


SPEECH 


HON.W.M.BECKNER, 


OK    KENTUCKIY, 


HOUSE    OF    REPRESENTATIVES. 


Thursday,  January  3,  1895. 


WASHINGTON. 

1895. 


AS 


SPEECH 

OF 

HOIST.    W.    M.    BBCKT^EE 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union  for 
^  the  furtlier  consideratin  of  the  bill  (H.  R.  8119)  to  amend  the  laws  relating 
r-    to  national  banking  associations— 

.  Mr.  BECKNER  said: 

Mr.  Chairman:  It  is  urged  in  some  quarters  that  Congress  ought 

not  at  this  session  to  undertake  any  important  legislation  because 

the  political  views  of  a  majority  of  its  members  are  not  in  accord 

„     with  the  sentiments  of  the  people  as  expressed  last  fall  at  the 

ballot  box.     In  1892,  an  overwhelming  majority  in  the  electoral 

colleges  and  an  emphatic  plurality  of  the  popular  vote  rebuked  the 

,^u    Republican  party  for  bringing  on  the  conditions  from  which,  after 

M  all  thatijas  been  since  done  for  their  amelioration,  the  country  still 

seriously  suffers. 

In  1894  the  people  simply  declared  their  lack  of  confidence  in  the 
Democratic  party  because  it  had  not  done  more  toward  alleviating 
a  situation  which  continued  to  be  distressing.  They  gave  us 
notice  in  no  unmistakable  terms  that  they  require  further  legisla- 
tion, and  woe  unto  those  public  men  who  do  not  heed  the  warn- 
ing. Trade  still  droops,  the  wheels  of  manufacture  move  slowly, 
the  sails  of  commerce  are  only  partially  extended,  and  no  industry 
is  yet  *'  so  flourishing  as  that  of  the  sheriff."  The  prices  of  our 
leading  products  continue  to  have  a  downward  tendency,  agi'i- 
culture  is  unprofitable  and  depressed,  labor  lacks  employment, 
our  mercantile  classes  vainly  sigh  for  the  return  of  prosperous 
times,  and  our  financiers  observe  with  dismay  the  constant  tend- 
ency of  gold  to  fly  to  foreign  shores. 

Mr.  Chairman,  I  was  elected  to  fill  a  vacancy  on  this  floor  by  a 
decisive  majority  cast  by  an  intelligent  and  patriotic  constituency- 
after  a  thorough  canvass,  in  which  I  stood  firmly  by  the  princi- 
ples of  the  Democratic  party  as  declared  at  Chicago,  and  insisted 
that  this  House  had  done  its  duty  at  the  first  and  second  sessions 
of  the  present  Congress,  and  that  it  could  be  relied  on  to  go  for- 
ward in  the  good  work  it  had  so  earnestly  and  faithfully  begun. 
We  have  ample  time  and  a  gi-eat  opportunity  in  dealing  with  the 
questions  now  before  us  to  again  demonstrate  to  the  country  that 
the  Democratic  party  is  still  alive  and  that  its  representatives 
have  the  wisdom  to  devise  and  the  courage  to  adopt  a  plan  that 

1739  3 


.">89390 


will  at  least  be  instrumental  in  doing  away  with  the  hard  times 
and  restoring  the  prosperity  we  enjoyed  before  Republican  legisla- 
tion had  precipitated  the  panic  in  this  country.  Those  who  have 
the  power  can  not  shirk  the  resi)onsibility  it  implies  by  pleading 
what  was  intended  as  a  reproof  for  their  halting  course. 

Wise  men  ne'er  sit  and  wail  tlieir  loss. 

But  cheery  seek  how  to  redress  their  harms. 

None  of  the  thoughtful  leaders  of  the  Republican  party  honestly 
regard  the  result  of  the  election  in  November  as  an  indication  that 
the  people  desire  a  reenactment  of  the  leading  laws  passed  by  tlie 
Fifty-first  Congi-ess  that  have  been  repealed  since  the  Democrats 
got  control  of  the  Government.  Outside  its  actual  beneficiaries, 
who  is  it  that  really  mourns  the  repeal  of  the  McKinley  bill  ?  It 
la  rumored  that  John  Sherman  will  even  sui)port  Foraker  rather 
than  have  so  extreme  a  measure  receive  an  indorsement  such  as 
the  election  of  its  author  to  the  United  States  Senate  might  be  con- 
strued to  be.  Where  is  there  in  any  quarter  worthy  of  attention ' 
a  demand  for  the  restoration  of  the  election  laws?  Who  of  any 
party  laments  the  repeal  of  the  purchasing  clause  of  the  Sherman 
Act  ?  I  insist  that  it  can  not  be  truthfully  claimed  that  the  people 
changed  the  political  complexion  of  this  House  in  November  be- 
cause they  disapproved  of  what  it  had  done  with  reference  to  these 
or  any  other  matters.  The  Democratic  party  has  incurred  their 
censure  rather  for  what  it  did  not  do  than  because  of  that  which 
it  actually  did.  I  notice  that  no  one  raised  the  question  of  the  pro- 
priety of  positive  action  by  this  Congress  when  the  great  railroad 
corporations  were  demanding  the  passage  of  a  bill  that  would  allow 
them  to  pool  their  issues  so  as  to  increase  the  rates  that  have  so 
much  to  do  with  the  prosperity  of  the  whole  country.  All  elements 
agree  that  the  financial  situation  is  critical  and  that  remedial  leg- 
islation is  needed. 

The  Republican  minority  of  the  Committee  on  Banking  and  Cur- 
rency admit  that  something  ought  to  be  done  when  they  say,  as 
they  do  in  their  report,  that  they  "  appreciate  the  pressing  de- 
mand for  wise  and  prompt  action  by  Congress  to  relieve  the 
sti'aiued  financial  condition  of  the  whole  country  and  more  es- 
pecially the  pressing  necessities  of  the  United  States  Treasury." 
The  shrewd  and  earnest  gentleman  [Mr.  Walker]  selected  by 
that  minority  to  open  this  debate  in  opposition  to  the  pending 
bill  and  whose  practical  hard  sense,  in  spite  of  his  politics,  I  had 
learned  to  admire  before  I  had  a  seat  on  this  floor,  has  drawn  the 
strongest  picture  I  have  yet  seen  of  the  situation  with  which  we 
are  confronted. 
Monetary  collapse- 
He  says — 

may  come  to  us  any  morning  as  we  awake.  There  ij  not  a  business  man, 
there  is  not  a  manufacturer,  there  is  not  an  intelligent  leader  among  the 
workingmen  who  does  not  look  into  his  morning  paper  first  to  learn  the 
financial  condition  in  thi.g  great  country  and  who  does  not  at  night  retire 
with  apprehension,  knowing  that  his  daily  bread  depends  upon  circumstarices 
and  conditions  which  to  our  disgrace  as  legislators  needlessly  threaten  the 
monetary  system  of  this  great  country.  *  *  *  No  language  that  I  can 
command  is  adequate  to  describe  the  situation. 

Sincere  man  as  he  is,  he  emphasizes  what  he  professes  to  believe 
by  offering  a  bill  which  he  frankly  admits  went  through  the 
Fifty-first  and  the  Fifty-second  Congresses  without  more  appre- 
1739 


elation  than  it  is  likely  to  have  in  the  pi*esent  House.  Tlie  gen- 
tleman from  Connecticut  [Mr.  Russell]  ,  who  seemed  to  derive 
so  much  satisfaction  from  the  fact  that  the  revenues  of  the  Gov- 
ernment are  less  than  its  expenditures,  said  in  his  speech  the  other 
day: 

The  constant  and  menacing  drain  on  the  Treasury  gold  reserve  is  the  se- 
rious difficulty.  That  is  the  critical  situation  which  m  fact  as  well  as  in  con- 
templation threatens  the  financial  solvency  and  the  maintenance  of  the  credit 
of  our  National  Government. 

There  is  not  a  single  member  v?ho  has  spoken  in  opposition  to 
this  bill  who  does  not  admit  the  dangers  of  our  condition  and  the 
necessity  for  action.  And  yet  only  one  Republican  even  suggests 
a  plan  of  relief,  and  this  is  so  unsatisfactory  and  insufficient  that 
in  three  Congresses,  so  far  as  I  can  learn,  he  has  found  no  man 
even  of  his  own  faith  willing  to  indorse  it.  My  colleague,  from 
the  Second  district  of  Kentucky,  who  is  an  honest  and  patriotic 
gentleman,  and  whom  I  deeply  esteem  for  his  many  noble  quali- 
ties, while  savagely  assailing  the  bill,  clearly  comprehends  the 
nature  of  the  crisis,  but  can  suggest  no  relief  save  the  impossible 
substitute  of  the  gentleman  from  Missouri. 

The  others  who  have  spoken  in  opposition  admit  all  that  is 
claimed  with  regard  to  the  necessity  for  remedial  legislation,  but 
are  unwilling  to  relieve  the  people  on  the  only  terms  that  are 
practicable  in  this  Congress.  The  bankers,  the  editors,  the  econo- 
mists, and  the  business  men  whose  opinions  are  to  be  found  in  the 
report  of  the  hearings  before  the  committee  all  agree  that  some 
action  should  be  taken,  however  far  apart  they  may  be  as  to  what 
should  be  its  character.  These  witnesses  thus  concurring,  and 
there  being  none  on  the  other  side,  it  must  be  conceded  that  there 
is  not  only  a  call,  but  a  necessity,  for  Congress  to  pass  some  meas- 
ure of  relief.  Whom  will  the  country  hold  responsible  if  we  fail 
.  to  discharge  so  manifest  and  pressing  a  duty? 

Narrow  as  the  margin  is  in  the  Senate,  Congress  and  the  Exec- 
utive, who  have  full  power  so  far 'as  legislation  can  affect  the  situ- 
ation, are  classed  as  Democratic.  Unless  the  men  whom  the  party 
has  placed  in  power  here  are  willing  to  be  branded  as  cowards, 
or  incompetents,  or  traitors,  they  must  act.  The  eyes  of  the  world 
are  on  them  and  they  are  bound  by  every  consideration  of  policy 
as  well  as  of  duty  to  make  a  change  in  a  situation  which,  although 
improved,  is  yet  deplorable. 

Mr.  Chairman,  I  believe  in  party  rule.  It  is  the  surest  guaranty 
of  the  perpetuity  as  well  as  of  the  purity  of  republican  institu- 
tions. Wherever  there  is  freedom  of  speech  there  will  be  differ- 
ences of  opinion  which  will  crystallize  into  organizations  that  will 
absorb  all  who  take  an  interest  in  public  affairs.  There  was  a 
period  following  the  close  of  the  second  war  with  Great  Britain 
when  there  seemed  to  be  no  longer  party  strife,  but  it  was  charac- 
terized by  as  mean  exhibitions  of  what  human  nature  is  capable 
of  as  have  ever  been  seen  in  oiir  public  life.  Clay,  Jackson,  John 
Quincy  Adams,  Crawford,  Calhoun,  and  De  Witt  Clinton  were 
each  at  the  head  of  factions  which  seemed  to  be  controlled  solely 
by  personal  hatreds. 

It  was  an  era  of  slime  and  vituperation,  and  will  ever  be  an  argu- 
ment in  favor  of  clearly  defined  parties  rather  than  of  irresponsible 
and  snarling  factions.     We  have  two  great  national  pohtical  or- 

1729 


6 

ijanizations  in  this  country,  formed  on  the  lines  laid  down  by  Jet- 
lerson  and  Hamilton  respectively.  There  will  neA'er  be  room  for 
another  that  will  have  more  than  a  fleeting  life.  Already  Popu- 
lism in  the  West,  which  had  gained  control  of  several  States,  has 
been  submerged  by  the  Republican  tidal  wave.  In  North  Caro- 
lina it  is  entering  the  shadow  of  the  same  dark  body,  and  will  soon 
be  lost  to  view.  Its  organization  was  conceived  by  men  patriotic 
but  erratic.  It  has  never  had  practical  management,  and  when- 
ever encouraged  has  soon  degenerated  into  a  scramble  for  the 
offices.  In  the  present  struggle  it  will  combine  with  the  Repub- 
licans to  defeat  the  pending  bill  and  throw  over  to  the  next  Con- 
gress if  i)ossible  the  settlement  of  the  terms  on  which  our  finances 
shall  be  conducted.  Its  representative  men  will  take  this  course 
in  spite  of  the  fact  that  Wall  street  and  the  bondholders,  as  they 
well  know,  will  then  have  absolute  control  of  this  House. 

The  leaders  of  the  Republican  party,  as  their  utterances  show, 
understand  full  well  the  importance  of  the  crisis  thi-ough  which 
we  are  passing,  but  we  need  not  hope  for  any  help  from  them. 
They  are  dominated  by  a  spirit  which  the  true  representatives  of 
the  people  can  not  trust.  They  are  in  sympathy  with  the  classes. 
It  is  our  mission  to  act  for  the  masses.  They  take  their  cue 
from  the  bankers  and  the  capitalists.  We  are  here  because  those 
who  toil  and  produce  have  interests  to  be  protected.  Of  course 
all  who  are  with  us  are  not  for  us.  There  are  gentlemen  on  this 
side  of  the  Chamber  who  see  no  impropriety  in  discussing  political 
questions  in  time  jdelded  to  them  by  Republican  leaders. 

We  have  in  our  ranks  representatives  who  would  be  offended  if 
called  Republicans,  but  who  insist  tliat  the  party  in  control  of  this 
House  shall  be  less  democratic  than  the  British  Parliament  with 
its  House  of  Lords  and  its  Commons,  embracing  many  of  the 
ricliestmen  of  England,  who  accept,  without  complaint,  an  income 
tax  that  places  a  reasonable  share  of  the  burdens  of  government- 
on  those  best  able  to  bear  them  and  most  interested  in  what  tax- 
ation is  intended  to  secure.  But  the  Government  is  under  our 
control  and  to  the  Democratic  party  the  country  looks  for  relief. 
We  need,  Mr.  Chairman,  a  bold,  vigorous  policy,  and  a  crack  of 
the  party  whip  sharp  enough  to  bring  every  man  into  line  or 
else  drive  him  into  the  enemy's  camp,  where,  if  he  is  more  at 
home  there,  he  properly  belongs.  As  for  me,  I  have  always 
trained  with  the  Democratic  party  and  hold  myself  amenable  to 
its  discipline. 

K  I  had  the  power  all  political  questions  before  Congress  should 
be  settled  by  a  caucus,  and  I  woiild  fill  every  office.  State  and  na- 
tional, with  an  honest,  faithful  Democrat,  even  if  there  should  be 
a  Republican  applicant  who  might  outspell  him  or  better  knew 
the  difference  betwixt  a  comma  and  a  semicolon.  Does  the  bill 
under  consideration  present  a  political  question?  Democrats,  look 
across  the  hall  and  you  need  not  have  a  doubt.  It  is  opposed  by 
an  unbroken  Republican  front.  The  party  line  has  been  unmis- 
takably dra-svn.  As  shown  by  the  minority  report,  all  the  Repub- 
lican members  of  the  Committee  on  Banking  and  Currency  have 
agreed  in  ad\'ising  that  the  bill  be  "indefinitely  postponed." 
President  Harrison,  in  his  last  message,  said: 

The  conditions  that  have  cn-ated  this  drain  of  the  Treasury  gold  are  in  an 
important  degree  political  and  not  commercial. 
1729 


It  is  currently  rumored  that  the  Republicans  have  already  held 
a  caucus  and  decided  to  oppose  the  pending  bill  in  whatever  form 
it  may  be  presented,  because — 

1 .  It  is  not  acceptable  to  Wall  street  and  the  more  powerful  bank- 
ing interests  of  the  country,  and 

2.  Its  defeat  might  force  the  President  to  call  an  extra  session 
of  Congress  and  thus  put  them  earlier  in  position  to  serve  the 
classes  to  whom  they  belong. 

It  being  clear  then  that  the  questions  embraced  in  this  measure 
are  strictly  political  and  that  the  Democrats  are  wholly  responsi- 
ble for  all  action  of  this  character,  let  us  consider  whether  the 
measure  we  are  considering  is  worthy  of  Democratic  support.  I 
regret  that  it  is  to  be  antagonized  by  the  substitute  of  the  gentle- 
man from  Missouri.  I  am  as  sincere  a  friend  of  silver  as  he  is, 
and  just  as  indignant  over  the  wrongs  it  has  undoubtedly  suffered. 
But  I  do  not  think  it  is  at  all  strengthened  by  using  it  on  every 
occasion  to  defeat  a  good  measure  that  has  a  chance  of  passage,  or 
to  continue  in  force  laws  that  ought  to  be  modified  or  repealed. 
He  knows  that  no  free  silver  bill  can  be  passed  at  this  session,  how- 
ever much  this  is  to  be  regretted.  It  is  unnecessary  to  discuss 
who  is  responsible  for  such  a  state  of  case.  We  are  engaged  now 
in  considering  a  condition,  and  not  in  studying  history.  I  do  not 
believe  the  substitute  to  be  in  order,  but  whatever  the  ruling  on 
this  point  may  be,  I  shall  unhesitatingly  vote  against  it  and  thus 
act  like  a  man  who  has  at  heart  a  purpose,  and  not  as  a  child  cry- 
ing for  the  moon. 

Mr.  BLAND.  How  does  the  gentleman  come  to  the  conclusion 
that  that  bill  is  any  more  likely  to  be  defeated  than  the  one  he  is 
talking  about? 

Mr.  BECKNER.  That  bill  has  been  heretofore  practically  dis- 
posed of  by  the  action  of  the  House. 

Mr.  BLAND.    Not  at  all. 

Mr.  BECKNER.  The  silver  question  has  been  disposed  of  by 
the  House;  and  the  position  of  the  President,  as  we  know,  is  such 
that  if  a  measure  of  that  kind  should  be  passed  by  this  and  the 
other  House  it  would  not  become  a  law.  We  know  the  position 
of  the  President  with  reference  to  this  bill. 

Mr.  BLAND.  Then  you  claim  it  to  be  Democratic  to  establish 
national  banks  throughout  the  country? 

Mr.  BECKNER.    No,  sir;  I  would  like  to  explain 

Mr.  BLAND.  I  think  the  gentleman's  position  needs  explana- 
tion. 

Mr.  BECKNER.  I  should  be  glad  to  enlarge  upon  that  point  if 
I  had  time,  but  I  fear  I  have  not.  I  will  only  say  that  I  am  ready 
to  meet  that  question.  The  national  banking  system  as  provided 
for  in  this  bill  vsdll  be  Democratic. 

The  gentleman  from  Connecticut  [Mr.  Russell]  in  his  speech 
the  other  day  declared  the  pending  bill  to  be  "emphatically  and 
distinctively  a  Democratic  measure."  How  could  it  be  otherwise, 
recommended  as  it  has  been  by  John  G.  Carlisle,  who  since  he 
entered  the  Kentucky  house  of  representatives  thii'ty-five  years 
ago  has  never  uttered  a  sentiment  or  cast  a  vote  that  was  not 
strictly  in  line  with  the  Democracy  of  Jefferson  and  Jackson?  It 
is  approved  by  Grover  Clevelan(i,  who  has  had  more  indorsements 
from  the  Democratic  party  in  national  convention  assembled  than 

1729 


8 

any  other  man  ever  had.  It  is  tlie  reaUzation  of  the  suggestion  in 
his  letter  written  to  Governor  Northen  in  September,  1893,  when 
lie  said: 

Within  the  limits  of  what  I  have  written  I  am  a  friend  of  silver,  but  I  be- 
lieve its  proper  place  in  our  currency  can  only  be  fixed  by  a  readjustment  of 
our  currency  lopislation  and  the  inauguration  of  a  consistent  and  compre- 
hensive fluancial  scheme. 

However  little  those  of  iis  who  are  silver  men  may  like  his  course 
with  reference  to  the  free  coinage  of  that  metal,  we  are  boiind  to 
remember  that  each  time  he  has  been  made  the  standard  bearer  of 
our  party  his  views  were  well  known  with  reference  to  this  ques- 
tion and  that  he  has  simply  acted  in  his  high  ofl&ce  as  everybody 
believed  that  he  would.  No  man  can  truthfully  charge  that 
Cleveland  and  Carlisle  are  acting  in  this  matter  under  the  dicta- 
tion of  Wall  street.  The  Secretary,  in  spite  of  all  the  pressure  that 
came  from  that  quarter,  steadfastly  refused  to  issue  bonds  even  to 
keep  up  the  gold  reserve  until  the  exigencies  of  the  situation  forced 
him  to  resort  to  this  step,  and  then  his  action  was  taken  vdth  evi- 
dent regret.  Even  so  ardent  a  Republican  as  the  gentleman  from 
Massachusetts  who  has  spoken  in  opposition  to  this  bill  shows  his 
confidence  in  Mr.  Carlisle's  honesty  of  purpose  when  he  says  that 
he  "has  on  the  stump  and  everywhere  deprecated  criticism  of 
Secretary  Carlisle  and  has  defended  him  with  whatever  ingenuity 
he  could  command." 

If  Cleveland  and  Carlisle  are  not  Democrats,  then  the  party  has 
fewer  members  than  even  the  elections  of  last  November  indi- 
cated. Ah,  gentlemen,  let  us  lay  aside  this  narrow  and  intol- 
erant spirit  and  remember  that  neither  in  church  nor  in  state  can 
we  find  associates  who  will  entirely  agree  with  us  in  every  article 
of  our  individual  faith.  The  bill  before  us  is  Democratic  in  its 
evident  purpose  to  retire  the  greenbacks  and  other  legal-tender 
representatives  of  money  as  far  as  may  be  done  without  contrac- 
tion of  the  currency.  There  is  one  cardinal  difference  between  a 
Republican  and  a  Democrat — one  believes  in  protection ;  the  other 
does  not. 

There  is  equally  as  pronounced  a  distinction  between  a  Populist 
and  Democrat — one  believes  that  the  Federal  Government  can 
make  paper  into  money;  the  other  denies  this  in  toto.  The  Con- 
stitution says  Congress  shall  have  power  to  coin  money,  not  to 
make  it.  God  alone  can  create  gold  and  sUver  which,  when  coined, 
are  the  only  sources  of  money  supply.  In  fact,  Justice  Clifford, 
in  his  dissenting  opinion  in  the  case  of  Knox  vs.  Lee,  in  12  Wallace, 
intimates  very  strongly  that  Congress  has  nothing  to  do  with  giv- 
ing to  either  gold  or  silver  its  legal  tender  quality,  that  when  a 
coin  is  minted  and  stamped  it  passes  current  for  its  face  value  by 
virtue  of  the  Constitution,  and  that  no  one  can  refuse  to  receive  it 
for  every  purpose  as  money.  The  Democrats  in  Congress,  when 
the  acts  makiiig  paper  currency  a  legal  tender  were  passed,  strenu- 
ously opposed  them  in  a  body.  Such  Republicans  as  Justin  S. 
Morrill,  Roscoe  Conkling,  and  Owen  Lovejoy  likewise  believed 
the  act  to  be  unconstitutional  and  refused  it  their  sanction. 

Secretary  Chase  jnelded  at  the  last  moment,  and  then  only  be- 
cause of  the  necessities  of  the  Government  gi-o\Aring  out  of  the  war, 
and  was  never  convinced  that  the  legal-tender  clause  was  author- 
ized by  the  organic  law  of  the  lai^l.  No  Democratic  judge  of  the 
Supreme  Court  has  ever  giA'en  his  appvoval  to  this  provision  of  the 
I73y 


9 

law,  and  in  fact  that  great  tribunal  had  to  gradually  approach 
the  argument  needed  to  sustain  what  none  but  those  believing  in 
the  HamUtonian  theory  of  government  could  have  been  induced 
to  approve.  It  was  an  evolutionary  process,  which  brought  the 
only  serious  scandal  ever  connected  with  our  highest  court. 

The  Locof  oco  Democrats  in  national  convention  assembled  in  1836 
declared  gold  and  silver  to  be  "  the  only  safe  and  constitutional  cur- 
rency," and  in  only  one  instance,  that  I  now  recall,  did  the  Demo- 
cratic platform  ever  recognize  paper  currency  as  lawful  money  of 
the  United  States.  This  was  in  1868,  when  politics  were  still  some- 
what chaotic  as  a  result  of  the  war,  but  in  1876  the  party  came  up  to 
the  full  measure  of  its  duty  and  denounced ' '  the  legal-tender  notes  as 
a  changing  standard  of  value  in  the  hands  of  the  people  and  their 
nonpayment  a  disregard  of  the  plighted  faith  of  the  nation."  I 
deny  that  it  is  the  duty  of  the  Government  to  furnish  currency  to 
the  people.  It  has  no  such  function  under  our  system.  The  plea 
that  it  is  dangerous  to  leave  a  matter  of  so  much  importance  to 
individuals  or  to  corporations  is  just  as  applicable  in  relation  to 
food  and  clothing,  or  any  of  the  other  necessaries  of  life.  It  is  all 
socialism,  which  is  contrary  to  the  genius  of  Anglo-Saxon  institu- 
tions. If  American  freedom  is  to  be  preserved  we  must  maintain 
that  spirit  of  individualism  which  is  the  foe  of  despotism  and 
which  so  stimulates  industry,  thrift,  and  enterprise,  and,  above 
all,  we  must  stick  to  the  chart  laid  down  by  the  fathers  in  the 
Federal  Constitution  for  the  guidance  of  the  ship  of  state. 

Another  commendable  feature  of  the  bill  is  that  it  provides  for 
substituting  noninterest-bearing  obligations  of  the  Grovernment 
for  the  interest-bearing  bonds  on  which  the  circulation  of  national 
banks  has  heretofore  been  based.  One  of  the  chief  objections 
always  urged  by  Democrats  and  Populists  to  the  national  banking 
act  has  been  the  advantage  thus  given  to  those  who  engaged  in 
this  kind  of  business.  One  of  the  effects  that  will  be  accomplished 
by  the  success  of  this  measure  will  be  that  it  is  a  step  toward 
divorcing  the  Federal  Government  from  the  banking  business. 
Mr.  George  G.  WUliams,  president  of  the  most  powerful  banking 
institution  in  America,  said,  before  the  committee  last  month, 
that  ' '  the  Treasury  is  one  of  the  greatest  banks  in  the  world,  and 
that  it  is  trying  to  conduct  its  business  without  sufficient  reserve." 
The  subtreasury  at  New  York  is  a  member  of  the  clearing  house 
in  that  city,  on  the  footing  of  a  regular  bank.  This  is  socialistic 
and  can  not  be  defended  by  either  Democrats  or  Republicans. 

Mr.  A.  B.  Hepburn,  the  accomplished  Comptroller  of  the  Cur- 
rency under  President  Harrison,  and  now  the  president  of  a 
national  bank  in  New  York,  says,  in  a  letter  to  the  committee, 
that  whilst  it  would  "  add  responsibilities  to  the  banks  it  would 
benefit  the  Government  and  the  people  to  have  the  Government 
retire  from  the  banking  business."  Secretary  Carlisle  followed 
his  Democratic  instincts  when  he  sought  to  accomplish  this  object 
in  his  bill. 

The  Federal  Government  was  not  organized  for  any  commer- 
cial or  mercantile  purpose.  Martin  Van  Buren,  in  his  History  of 
Political  Parties  in  the  United  States,  admirably  expresses  the 
Democratic  view  of  its  functions  when  he  says: 

AH  that  the  people  can  ask  from  administration  is  the  maintenance  of  order, 
protection  in  the  enjoyment  of  their  civil  and  political  rights,  and  the  man- 
agement of  public  affairs  in  a  spirit  of  equal  justice  to  all  men. 
1729 2 


10 

Public  sentiment  has  been  so  much  debauched  by  Republican 
practices  and  policies  that  orators  and  editors  now  glibly  talk  about 
the  duty  of  the  Government  to  take  care  of  the  people.  Such  a 
system  as  these  would  establish  is  thoroughly  illustrated  in  Russia, 
where  the  Czar,  who  is  the  government,  is  the  guardian  of  all  the 
people,  and  in  return  reciuires  absolute  submission  on  their  part 
to  his  imperious  will.  With  us  the  Government  is  merely  the 
agent  of  the  people  and  has  its  power  of  attorney  in  the  Constitu- 
tion, and  beyond  that  it  is  without  authority.  There  is  one  i)ro- 
\-ision  in  the  pending  bill  which  every  man  who  believes  in  the 
Democratic  platform  of  1892  must  approve.  It  is  to  be  found  in 
section  10,  which  allows  the  issuance  of  circulation  by  State  banks 
on  terms  safe  to  those  into  whose  hands  it  may  come.  For  more 
than  thirty  years  the  lawmaking  power  of  the  United  States, 
under  the  pretense  of  a  tax,  has  deprived  the  States  of  a  power 
which  Democrats  believed  they  reserved  in  making  the  Federal 
Constitution. 

I  know  that  the  Supreme  Court  has  affirmed  the  validity  of  this 
action,  but,  like  Secretary  Carlisle,  I  still  have  my  own  opinion 
with  reference  to  the  question.  This  provision  of  the  pending  bill 
is  an  important  concession  to  home  rule  or  local  government, 
which  is  one  of  the  most  cherished  tenets  of  Democratic  faith.  I 
deny  that  national  banks,  conducted  on  the  lines  laid  down  by  the 
Secretary  in  this  measure,  are  anti-Democratic.  They  were  de- 
vised by  Salmon  P.  Chase,  who  was  elected  to  the  United  States 
Senate  in  1849  as  a  Democrat,  and  who  was  never  a  Republican 
except  on  the  one  and  only  issue  of  slavery.  Writing  to  Joshua 
R.  Giddings,  in  1846,  he  said: 

I  will  give  you  briefly  my  own  views.  I  can  not  adopt  a  Whig  antislavery 
platform  because  I  do  not  at  all  concur  in  Whig  views  of  public  policy,  either 
as  an  antislavery  man  or  a  simple  citizen.  1  tnink  that  tne  political  views  of 
the  Democrats  are  in  the  main  sound.  *  *  *  I  do  not  believe  in  a  high 
tariff,  in  a  bank  of  the  United  States,  or  a  system  of  corporate  banking. 

In  1863,  writing  to  Joseph  Medill,  of  the  Chicago  Tribune,  who 
is  now  making  so  valiant  a  fight  against  McKinleyism  within  the 
Republican  ranks,  and  who  was  opposed  to  the  national  banking 
system  on  the  ground  that  "  we  ought  to  get  rid  of  banks  alto- 
gether and  come  to  gold  currency,"  Secretary  Chase  said: 

I  do  not  propose  to  discuss  these  objections.  My  time  does  not  permit.  I 
only  wish  to  say  that  I  have  looked  on  all  sides  of  the  subject  with  all  the  care 
I  could  use,  and  lam  fully  satisfied  we  can  not  get  rid  of  banks  and  their  cir- 
culating notes.  What  I  seek  is  to  deal  with  what  must  be  in  such  a  way  as  to 
get  from  it  the  greatest  possible  good. 

Banks  are  merely  exchanges  for  money.  Those  who  have  a  sur- 
plus of  this  most  convenient  commodity  simply  put  it  into  the  stock 
of  a  bank  or  place  it  on  deposit  for  safe  keeping,  and  it  is  hired  out 
to  those  who  need  it  and  who  can  give  satisfactory  assurance  of 
its  return  with  the  profit  it  has  earned.  Banks  are  sometimes  mis- 
managed, as  is  government  itself,  and  may  be  used  to  the  detriment 
of  a  community  or  of  those  who  deal  with  them,  but  they  are  great 
conveniences  and  as  necessary  as  any  other  business  enterprise. 
I  have  been  astonished  to  hear  the  objections  urged  by  Jefferson 
and  Jackson  to  the  United  States  Bank  quoted  in  this  debate  as 
applicable  to  the  present  national  banking  system. 

The  United  States  Bank  was  a  great,  overshadowing  institution 
which  was  making  itself , felt  in  political  matters  and  was  too  power- 
1729 


11 

ful  an  organization  to  be  tolerated  in  a  free  government.  Demo- 
cratic leaders  denied  the  right  of  the  Federal  Government  to  have 
an  interest  in  its  business,  and  finally  Jackson  attacked  it  in  the 
plenitude  of  its  power,  and  by  the  force  of  his  mighty  will  and 
the  support  of  the  people  whom  he  arorised  to  appreciate  the 
danger  of  its  existence  it  was  so  completely  crushed  that  no  po- 
litical party  has  ever  since  dared  to  champion  its  resurrection. 
Its  career  ought  to  be  an  object  lesson  to  all  holding  Populistic 
views.  The  national  banking  system  scatters  the  associations  it 
authorizes  all  over  the  country  and  makes  no  common  bond  by 
which  they  can  have  sufficient  inducement  to  combine.  Mr. 
Carlisle's  plan  separates  them  still  further  from  the  Government 
and  makes  them  less  united  in  interest  than  they  have  been 
heretofore.  Our  farming  and  laboring  classes  who  feel  that  capital 
does  not  treat  them  fairly  will  have  better  prospects  of  success  in 
the  great  struggle  they  are  always  engaged  in  when  they  learn 
that  no  citadel  was  ever  captured  until  the  approaches  had  been 
first  taken.  "Valor  is  a  good  thing,  but  discretion  is  its  better  part. 
There  is  another  strong  reason  why  a  Democrat  should  support 
this  bill.  It  may  soimd  to  some  people  rather  out  of  date  in  the 
year  1895,  but  each  Democrat  and  good  citizen  who  has  read  the 
earlier  history  of  our  country  and  stops  for  a  moment  to  consider 
will  appreciate  its  force.  Under  the  present  system  of  national 
banking  nearly  every  community,  and  especially  those  in  which 
capital  seems  disposed  to  concentrate,  have  a  powerful  interest 
opposed  to  the  payment  of  the  national  debt,  on  which  the  circu- 
lation of  these  banks  is  based.  This  is  shown  in  the  clamor  that 
comes  from  New  York  and  other  sources  for  the  passage  of  a  law 
that  will  authorize  the  funding  of  the  legal-tender  notes  in  interest- 
bearing  bonds,  thus  providing  for  a  contraction  of  the  currency 
and  affording  a  safe  investment  for  the  surplus  capital  that  is  now 
idle  in  those  regions. 

If  there  was  any  one  great  purpose  that  animated  and  gave  pecu- 
liar tone  to  the  policies  of  Jefferson,  Madison,  and  Gallatin,  that 
triumvirate  of  patriots  and  statesmen  who  so  firmly  laid  the  foun- 
dations of  the  Democratic  party  in  popular  confidence,  it  was  the 
extinction  as  speedily  as  possible  of  the  national  debt,  which  Ham- 
ilton, on  the  other  hand ,  contended  was  a  source  of  blessing.  "The 
discharge  of  the  debt  is  vital  to  the  destinies  of  our  Government," 
wrote  Jefferson  to  Gallatin  in  1809,  and  he  regarded  a  failure  to 
secure  its  early  payment  as  leading  inevitably  "to  the  English 
career  of  debt,  corruption,  and  rottenness,  closing  with  revolution." 

In  1792  the  same  great  man,  in  a  letter  to  Washington,  said: 

This  exactly  marks  the  difference  between  Colonel  Hamilton's  views  and 
m^ine — that  I  would  wish  the  debt  paid  to-morrow;  he  wishes  it  never  to  be 
paid,  but  always  to  be  a  thing  wherewith  to  corrupt  and  manage  the  Legis- 
lature. 

Pitt  invented  the  sinking  fund  for  England,  and  through  it  gave 
the  moneyed  classes  an  infliience  in  governmental  affairs  which 
they  could  not  have  secured  in  any  other  way.  Hamilton  followed 
his  example,  but  was  resisted  by  Jefferson  in  this,  as  well  as  in 
every  other  policy  looking  toward  a  stronger  Government.  Their 
views  differed  so  materially  that  aroiind  each  leader  gathered  the 
elements  that  have  since  made  the  distinctions  between  the  two 
leading  parties  of  the  Republic. 

1729 


12 

In  writing  to  Madison  in  1793,  Jefferson,  in  terms  that  might 
almost  be  used  to-day,  described  the  forces  that,  in  substance, 
stand  facing  each  other  in  politics  now.  "  The  line,"  he  wrote, 
"  is  now  di-awn  so  clearly  as  to  show  on  one  side — 1.  The  fashion- 
able circles  of  Philadelphia,  New  York,  Boston,  and  Charleston 
(natural  aristocrats).  2.  Merchants  trading  in  British  capital. 
3.  Paper  men.  (AU  the  old  Tories  are  foimd  in  some  one  of  the 
three  descriptions. )  On  the  other  side  are — 1.  Merchants  trading 
on  their  own  capital.  3.  Irish  merchants.  3.  Tradesmen,  me- 
chanics, farmers,  and  every  other  possible  description  of  our  citi- 
zens." 

Whatever,  therefore,  tends  to  weaken  the  disposition  to  con- 
tinue the  national  debt  is  what  a  true  Democrat  should  favor. 

The  biU  ought  to  be  supported  by  every  reasonable  friend  of 
silver  because  it  proMlMts  the  national  banks  from  issuing  any  cur- 
rency of  a  denomination  less  than  $10.  The  significance  of  this  is 
to  leave  a  place  for  silver  dollars  and  subsidiary  coin,  which  wiU 
at  once  strengthen  and  make  a  demand  for  the  weaker  metal.  This 
policy  is  not  a  new  one  at  all.  As  far  back  as  1856,  Mr.  Chase, 
afterwards  the  great  minister  of  finance  during  the  war,  when 
sworn  in  as  Governor  of  Ohio,  suggested  in  his  inaugural  address 
that  it  would  be  "  wise  and  salutary  "  for  Congress  to  prohibit  the 
circiilation  of  small  notes  as  a  substitute  for  coin. 

Of  course  the  bill  does  not  and  could  not  do  all  that  every  Demo- 
crat desires  to  see  accomplished  with  reference  to  our  finances, 
but  certainly  it  will  be  another  milestone  on  the  road  to  pros- 
perity toward  which  the  repeal  of  the  purchasing  clause  of  the 
Sherman  Act  and  the  new  tariff  law  undoubtedly  point,  and,  what 
is  of  great  importance,  will  show  that  the  party  has  convictions 
and  is  not  afraid  to  carry  them  into  practice.  Doubts  can  be  raised 
as  to  the  effect  of  any  bill  that  provides  for  the  future,  but  we 
will  certainly  be  condemned  if  we  allow  the  session  to  close  with- 
out having  done  something  intended  for  the  public  relief. 

No  great  deed  is  done 

By  f alterers  who  ask  for  certainty. 

The  chief  objections  urged  to  the  bill  by  all  who  have  spoken 
against  it  have  been  removed  by  the  substitute  offered  by  the 
gentleman  from  Illinois  with  the  known  approval  of  the  Secre- 
tary of  the  Treasury. 

Mr.  PENCE.    Will  the  gentleman  jaeld  for  a  question? 

Mr.  BECKNER.     Yes. 

Mr.  PENCE.  Do  I  understand  the  gentleman  to  state  that  the 
substitute  was  offered  with  the  "known  approval"  of  the  Secre- 
tary of  the  Treasury  ? 

Mr.  BECKNER.  That  has  been  currently  reported,  that  I  have 
accepted  it  as  a  fact.     I  do  not  know  it  of  my  own  knowledge. 

The  withdrawal  of  Government  bonds  and  the  acceptance  of 
the  system  provided  for  in  this  measure  by  United  States  banks 
now  organized  are  no  longer  mandatory,  and  the  immediate  lia- 
bility of  each  bank  for  the  notes  of  all  others  is  not  one  of  its  fea- 
tures as  now  presented.  Better  provision  is  made  with  reference 
to  redemption  facilities  than  was  provided  for  in  the  orginal  bUl, 
and  the  constitutional  question  as  to  the  right  of  Congress  to 
change  the  security  of  those  holding  notes  of  issue  has  been  elimi- 

1729 


13 

nated.  A  most  important  modification  with  respect  to  State  banks 
has  been  made  in  authorizing  the  Secretary  of  the  Treasury  and 
the  Comptroller  of  the  Currency  to  grant  a  certificate  that  the  in- 
stitution asking  for  it  is  allowed  to  issue  currency  under  the  act 
before  it  undertakes  to  do  so,  and  in  making  the  bank  and  not  the 
holder  of  its  paper  liable  for  the  tax  to  be  imposed  in  case  it  should 
fail  to  carry  out  the  provisions  of  the  law.  The  bill  does  not  yet 
please  the  bankers  and  brokers  of  Wall  street,  and  I  confess  that  I 
am  glad  it  does  not.  They  unite  in  this  contest  with  those  of  Popu- 
listic  views  in  the  South  and  West,  and  are  equally  as  selfish  and 
unreasonable.  To  neither  would  it  be  safe  to  intrust  the  powers 
of  government.  Republicanism  has  made  Populism  possible,  just 
as  despotism  finally  gives  rise  to  anarchy.  The  extreme  dislike  of 
the  New  York  banks  to  the  bill  may  in  part  be  accounted  for  by 
the  change  that  it  makes  in  the  matter  of  reserves,  which  are  to 
them  so  rich  in  profit.  I  refer  to  the  reserves  which  the  coiintry 
banks  now  keep  on  deposit  in  great  part  in  New  York,  but  which 
they  can  do  as  they  please  with,  or  eyen  not  keep  at  all,  under  the 
provisions  of  this  measure. 

There  is  one  consequence  of  this  bill  which  a  representative  of 
the  constituency  who  sent  me  here  ought  to  approve  most  heart- 
ily. The  sixteen  counties  of  my  district  contain  a  population 
dependent  in  large  measure  at  present  on  agriculture.  Some  of 
these  counties  have  deposits  of  coking  coal  equal  to  that  found  in 
the  Connellsville  region,  and  abundant  enough  to  supply  the  in- 
dustries of  the  continent  for  ages  to  come.  They  have  great  beds 
of  cannel  and  bituminous  coals  of  the  richest  grades  and  vast 
forests  of  yellow  poplar,  oak,  walnut,  maple,  and  other  valuable 
woods  which  the  world  will  soon  need.  The  toughest  and  best 
car-wheel  iron  that  has  yet  been  found  in  America,  building  stone, 
fire  clay,  potter's  clay,  and  other  elements  of  wealth  abound  in 
that  region  so  favored  by  Providence.  Lands  are  still  cheap  be- 
cause capitalists  have  not  yet  learned  their  value.  We  have  been 
cut  off  from  the  lines  of  railroad  that  have  developed  other  re- 
gions so  near  the  center  of  the  country,  because  the  great  Cum- 
berland range  of  mountains  has  presented  an  obstruction  which 
until  recently  enterprise  has  not  been  encouraged  to  surmount. 

My  district  has  several  ever-flowing  rivers  which  could  easily 
be  made  highways  of  commerce  of  inestimable  value  to  other  sec- 
tions of  the  country. 

What  we  need  is  capital  to  develop  all  this  dormant  wealth,  and 
nothing  would  so  stimulate  investments  as  an  increase  of  currency. 
In  the  entire  district  there  are  only  nine  banks,  and  none  of  these 
is  to  be  found  outside  five  of  the  sixteen  counties. 

It  can  not  be  doubted  that  this  bill  will  make  currency  more 
abundant.  There  were  a  nvimber  of  experts  before  the  committee 
who  gave  their  views  with  reference  to  this  question.  Mr.  Rich- 
ard P.  Roth  well,  editor  of  the  Engineering  and  Mining  Jom-nal 
of  New  York,  says: 

The  first  point  I  want  to  make  in  regard  to  the  plan  of  Secretary  Carlisle  is 
that  it  is  a  measure  of  large  inflation. 

Mr.  George  A.  Butler,  president  of  the  National  Tradesmen's 
Bank  of  New  Haven,  Conn.,  said: 

Mr.  Butler.  I  think  no  section  of  the  country  will  be  moro  g^reatly  hene- 
fited  by  the  adoption  of  any  one  of  these  plans  than  the  South. 
1729 


14 

Mr.  Black.  When  you  say  "any  one,"  do  you  include  the  plan  of  the  Secre- 
tary of  the  Treasury  ?  «   ,  .     . 
Mr.  Butler.  Yes ;  becaxise  that  provides  for  an  increase  of  the  note  issue. 

Mr.  A.  J.  Warner,  president  of  the  Bimetallic  League,  and 
one  of  the  most  ardent  and  best  informed  friends  of  silver  in  the 
world,  was  asked  by  Mr.  Ellis  of  Kentucky  whether  in  his 
opinion  if  either  the  Baltimore  plan  or  the  pending  bill  were 
adopted  it  would  increase  the  volume  of  currency  in  the  country: 

Mr.  A.  J.  Wakner.  I  think  either  of  them  would  increase  the  volume 
materially,  after  time  onouu'h  had  been  given  to  let  it  get  into  full  operation. 

INIr.  Ellis  of  Kentucky.  What  would  be  the  effect  on  agricultural  products 
if  that  happened? 

Mr.  A.  J.  Warner.  There  would  be  a  general  rise  in  prices,  except  in 
products  which  depend  for  their  market  mainly  on  foreign  demand,  such  as 
cotton  or  wheat,  the  surplus  of  which  goes  abroad.  These  would  be  affected 
only  to  the  extent  that  the  entire  currency  of  the  country  depreciated  under 
the  influence  of  an  augmentation  of  value.    Other  things,  however,  pretty 

fenerally,  such  as  lands,  houses,  and  everything  not  exportable,  and  not 
ependeht  on  foreign  demand,  or  on  gold  prices  abroad,  would  rise. 

Other  gentlemen  of  the  highest  standing  in  the  financial  world, 
and  whohave  evidently  given  the  subject  careful  consideration, 
express  substantially  the  same  opinions.  In  fact,  every  man  of 
common  sense  who  vnll  read  the  bill  must  see  that  it  allows  the 
banks  more  ciirrency  on  the  same  amount  of  capital,  and  that 
they  get  this  on  such  terms  as  will  encourage  them  to  adopt  the 
Secretary's  plan. 

It  has  'been  urged  against  this  bill,  Mr.  Chairman,  that  it  will 
not  be  effective  in  accomplishing  the  principal  purpose  that  its 
author  had  in  view;  that  it  makes  no  adequate  provision  for  retir- 
ing permanently  the  legal-tender  issues  which  are  used  so  ruth- 
lessly in  dravdng  gold  from  the  reserve  fund  of  the  United  States 
Treasury,  and  thus  compelling  repeated  resorts  to  a  sale  of  the 
bonds  which  the  Secretary  has  been  so  loth  to  put  upon  the  market. 
Those  who  take  this  \'iew  of  the  matter  have  not  the  faith  that  I 
have  in  the  recent  revision  of  the  tariff.  The  receipts  during  the 
past  month  have  increased  so  encouragingly  that  we  may  fairly 
anticipate  the  near  approach  of  the  time  when  the  surplus,  referred 
to  in  the  bill,  will  be  sufficient  to  secure  a  retirement  of  the  legal 
tenders  at  as  rapid  a  rate  as  the  business  of  the  country  will  stand. 

The  McKinley  bill  had  seriously  crippled  the  revenues  in  order 
to  provide  unreasonable  protection  for  the  pets  of  the  Republican 
party,  but  as  soon  as  the  times  shall  reAave,  as  they  will  do  under 
the  legislation  of  this  Congress,  there  will  again  be  an  overflow- 
ing Treasury,  and  the  surplus  will  be  ample  to  carry  out  the  cher- 
ished purpose  of  the  Secretary.  In  addition  to  all  these  good  and 
sufficient  reasons  for  supporting  the  bill,  Mr.  Chairman,  I  am 
much  persuaded  to  do  so  because  it  is  the  work  of  a  brain  and  con- 
science as  patriotic  as  the  land  contains,  and  is  the  result  of  a  long 
experience  in  public  life  and  a  diligent  study  of  the  questions  with 
which  it  deals.  John  G.  Carlisle  has  what  Lamartine,  in  speaking 
of  Mirabeau,  called  "the  infallibility  of  good  sense." 

It  has  been  suggested  as  weakening  the  force  of  his  potent  name 
that  he  lias  never  been  a  banker  or  in  any  sense  a  financier. 
America  has  had  three  great  finance  ministers  since  the  Constitu- 
tion was  adopted — Hamilton,  Gallatin,  and  Chase — but  neither  of 
these  was  connected  with  a  bank  or  had  in  any  way  had  special 
training  in  financial  matters  until  called  to  preside  over  the  Treas- 

17^9 


15 

ury  Department.  Tliey  did  not  possess  clearer  intellects  and  had 
had  no  experience  with  public  qiiestions  that  entitled  their  views  to 
greater  weight  than  should  be  attached  to  those  of  the  able  man 
who  is  the  financial  head  of  the  present  Administration.  I  have 
watched  his  career  so  long  and  so  carefully  that  I  feel  it  is  not 
extravagant  for  me  to  say  that  if  the  Government  could  be  admin- 
istered on  the  policies  that  he  believes  and  to  which  he  has  adhered 
throughout  his  public  life  the  country  would  see  how  apt  and  true 
is  that  eloquent  tribute  to  Democratic  principles  which  Chase  often 
so  approvingly  quoted. 

Democracy — 

Said  William  Allen,  of  Ohio,  whose  statue  stands  in  Statuary 
HaU— 

is  a  sentiment  not  to  be  appalled,  corrupted,  or  compromised.  It  knows  no 
baseness;  it  cowers  to  no  clanger;  it  oppresses  no  weakness.  Fearless,  gener- 
ous, and  humane,  it  rebukes  the  arrogant,  cherishes  honor,  and  sympathizes 
with  the  humble.  It  asks  nothing  but  what  it  concedes;  it  concedes  nothing 
but  what  it  demands.  Destructive  only  of  despotism,  it  is  the  conservator 
of  liberty,  labor,  and  property.  It  is  the  sentiment  of  freedom,  of  equal 
rights,  of  equal  obligations.  It  is  the  law  of  nature  pervading  the  law  of  the 
land.  The  stupid,  the  selfish,  and  the  base  in  spirit  may  denounce  it  as  a 
vulgar  thing,  but  in  the  history  of  our  race  the  democratic  spirit  has  devel- 
oped the  highest  moral  and  intellectual  attributes  of  our  nature.  Yes;  that 
is  a  noble  and  magnanimous  sentiment  which  expands  our  affections,  en- 
larges the  circle  of  our  sympathies  and  elevates  the  soul  of  man  until,  claim- 
ing an  equality  with  the  best,  he  rejects  as  unworthy  of  his  dignity  any  po- 
litical immunities  over  the  humblest  of  his  fellows. 

[Prolonged  applause.] 
1729 


2  C0NGKES8 


And  yet  this  did  not  bring  universal  happiness  and  oon 
ment.  The  annuitant  and  bondholder  of  Europe  complain( 
their  Grovernments  that  by  the  combined  use  of  gold  and  r 
as  money  the  general  prices  of  the  necessaries  of  life  ^ 
range  too  high,  making  their  incomes  and  their  annuities  1 
smaller  amount  of  the  products  of  labor  than  before  tlie  inc 
in  the  gold  output,  and  therefore  they  then  and  there  organiz 
destroy  the  money  functions  of  one  of  the  metals.  Gold 
promising  to  be  the  more  abundant  was  selected  for  theonsla 
In  pursuance  of  this  determination  Germany  and  Austri 
monitized  gold  in  1857.  The  intention  was  to  make  this 
general  in  Europe,  but  France  became  stubborn  and  wouh 
join  in  the  crvisade,  and  as  the  charter  of  the  Bank  of  Enj 
required  it  to  purchase  at  a  fixed  price  all  gold  offered  ; 
counters,  England  could  not  join  the  movement,  and  thei 
Gex'many  and  Austria  rehabilitated  gold,  and  the  movemen 
inaugurated  in  1865  for  the  destruction  of  silver. 

The  owner  of  ready  money  and  securities  had  watched  thf 
up  and  up  in  value  during  this  forty-year  money  famine  j 
proportion  as  the  price  of  general  property  went  down  as  n 
became  scarce.  With  equal  anxiety  they  watched  the  purcli 
power  of  their  annuities  and  annual  interest  collections  go 
and  down  as  the  outpouring  of  the  gold  from  the  mines  so  n 
increased  the  volume  of  legal-tender  money  in  the  world  ant 
eral  prosperity  and  the  prices  of  general  property  and  labor 
up  and  up  in  proportion  to  this  increased  money  supply. 

During  these  contrasting  periods  the  inflexible  economic  p 
pie  that  any  increase  in  the  volume  of  money  increases  the 
of  general  property  and  any  decrease  in  the  money  supply,  as- 
pared  with  the  population  and  quantity  of  property  and  la 
be  exchanged,  likewise  decreases  the  general  prices  of  proper i 
labor,  was  so  burnt  into  the  qixick  and  marrow  of  the  owi 
ready  money,  securities,  and  those  receiving  annuities,  tha 
redoubled  their  efforts  to  destroy  the  money  functions  of  < 
the  metals.  They  preferred  to  destroy  gold,  but  could  no: 
hence,  in  1865,  they  firmly  moved  on  silver,  not  because  i 
depreciated,  because  it  was  then  at  a  premium  over  gold,  t 
the  sole  purpose  of  making  money  dearer  and  scarcer  and  n< 
rily  property  and  labor  cheaper  everywhere. 

The  minority  of  the  French  monetary  commission  of  !■ 
ported  to  its  Government  to  this  effect,  and  declared  that 
use  of  the  two  metals  for  money  that  it  made  general  pr 
high  and  injuriously  affected  that  class  of  people  having  fij 
comes  and  nothing  to  sell  but  everything  to  buy. 

The  United  States  Monetary  Commission  of  1876  repoi 
Congress,  among  many  other  things,  as  follows: 

Manifestly  the  real  reason  for  the  demonetization  of  silver  was  thi 
hension  of  the  creditor  classes  (money-lending  classes)  that  the  cc 
production  of  the  two  metals  would  raise  prices  and  cheapen  mone 
one  of  them  was  shorn  of  the  money  function.  In  Europe  this  rea 
distinctly  avowed. 

These  reasons,  so  conspicuously  stated  when  the  annuitai 
creditors  were  trying  to  establish  a  silver  standard  and  wh< 
were  trying  to  fasten  a  gold  standard  upon  the  world,  ougli 
continually  impressed  upon  the  minds  of  the  farmers,  mine 
toilers  generally  until  they  see  the  true  cause  of  our  distrt 
correctly  spot  the  special  classes  fastening  it  upon  the  worl 

Gold  and  silver  money  of  practically  the  present  standar 
constituted  the  legal-tender  money  of  this  Government  ft 
foundation  down  to  the  destruction  of  silver  in  1873.  Tha' 
destroyed  without  the  knowledge  or  request  of  the  peop 
simultaneously  with  the  destruction  by  so  many  nations  in  I 
is  conclusive  that  the  objects  sought  in  the  United  States 
Europe  were  in  pursuance  of  a  common  and  fixed  purpos 
international  money  power  to  destroy  silver;  not  because 

-1 ^„4-,;i    f^n.ii-.-nmt,  fKo>i    cif  Q    ■nrprnimii  of   3  cen*"S   ab' 


^0ugiT  >iottaI  %tK  vL 


FIFTY-THIRD   COInTGRESS,  THIRD   SESSION. 


Tbe  Currency 
SPEECH 

HON.   J.   C      BELL, 

In  the  House  of  Represehtatites, 

Friday,  December  Si   ISH 


Mr.  BELLot  Colorado  said: 


J  present  deplor  ble  conditinn 


gartial  and  vxpeusive  bunking  Hystem     TIub  ib  more  than  a 
anking  amendment.    It  is  intended  as  a  complete  change 
I  monetary  policy.    It  is  offered  as  an  amj  le  epeLific  for  the  ii 
gTiiitiea  of  our  present  financial  chios 
The  sires  of  this  measure  intend  that  it  sliall  aupnl  rt  thi= 
'        '  c  money  circulation  of  gold  an  1  sil*  er  with  hank  [    |    r 


rency  of  the  country. 


limitations.    Tne  primarv  objett    f  tl  e    r  -i 

-x.consummat«the!  ti|,    1        I 

Jtoha-vetbe  Amen     i  Refubl 
)m  and  equal  ngbts  delegate  to 

the  exclusive  right  to  issue  and  control  the  paper  cur 

it^gral  part  of  the  grand  plan  of  operating  on  a 

siandard  as  the  international  monej  and  measure  of 

the  world.    The  S4  000  00 1 000  of   gold  in  thp  world 

tributed  among  1,500  000  000  mhabitants  would  mve 

each  ^.75  or  $23  leas  than  our  own  per  capita  circulation     The 

would  comer  this  little  mite  of  gold  coin  and  ibsue  fr  m 

$S0  of  bank  paper  as  the  exclusive  money 

among  the  people,      r  "       "'     

considered  and  urged 


equally  diet 
each  ^." 
banks  ^ 


a  settlement  o 


r  circulation 


cial  difficulties 


t  stand  alone  i 


ational 
y  famine  faa.s 


Bof  the  producing  and  nonrnl- 

lands  and  climes, 
than  a  generation  the  unified  bank  powers  of  the  world 
iigging  at  a  single  cable  endeavoring  to  drag  down  the 
national  money  and  hoist  the  bankers'  paper. 

the  misf  ortnnes  of  waror  panic  have  overwhelmed  aprovince 


have  been  tugging  a 


erty  and  distress. 

Tills  maudlin  sentiment  of  the  banker  and  professional  money 
changer  as  to  sound  finance,  honest  money,  and  unimpaired  pub- 
lic credit  is  an  ingenious  specious  plea  in  their  self-defense. 

Who  is  or  ehonld  be  dearer  to  this  Government  than  its  own  in- 
The  enlightened  statesman  Burke.  In  speaking 


1  the  property  of  t 


bankers,  pertinently  said 

.._-         r---j  —  - —  "- and  not  to  the  dei 

creditor  of  the  State,  that  the  original  faith  of  soeiet 
Tlie  claim  of  the  citizen  is  prior  m  time,  paramount' 
superior  in  equity." 


pledged. 


Ai 


This  hill  IS  another  mast  r  utroke  in  the  name 
m  the  excIuBiTe  interest    f  the  banking  v  rl  1 

If  passed  it  is  exppcted  t    and  it  will        11 1 
the  requiem  of  the  circulati  n  of  gold     i  1 
Constitution  for  a  generation  ti  come     T 
this  country  wh    are  nothing  but  mere  j 
ready  -dhhd<!t    make  ths  1  in,ei,t  possiHe  i 
int.  t     1  (i^f   1  1       tit     tt  p  Intemati  i  il  B 


'  the  bank  p  i 
f  tl  e  1  mkmg 
ith  the  European  banking,    1 1, 


J  1  mkmg  V 

European  1  ^.        .        . 

ne>  and  per  necessity  the  destmy  of  the 

nandpitn  tic  Jackson  bo  effectually  checked  t 


said      Jacks  n  h 
conqaered  but  lilt 

The  bank  pow  r 


the  banking  power  Thomas  I 

the  b. 

the  jungles  will  r 


+tfn  tb^  bank    jet  the  bank  j 


fa 


to  m  rease  the  in  ut  I  t  1  SUt  L  n  la  vhi  h  the  G  vern 
ment  then  felt  it  was  c  m]  elle  It  r  nt  ui  n  the  market  In  the 
nudst  of  this  dire  distress  the  bank  p  wer  has  audaci  uslv  reap- 
peared and  impudently  demanded  that  we  \nel  1  up  t    the  b 

r„  J j„_»  — ^ 1 *  *»,„  1  ttle  pittam      '     ' 

if  val  1. 


m dependent  nal 


[cept  the  1  ttle  pittame  if  ^old  n 


1  II  -ses    f  the  leoplehave 

I  I  r  dl>  drift  d  fr  m  the 


m  nej  i.hungei    anl  I 


r(,e  ha\e  demanded  an  abun  lance 
,  impregnable  pro  if  that  no  indi 


£hgliteen  hundred  and  eight  ushered  m  a  money  famme  which 


unbroken  until  after  the  discovery 
R49  ind  m  Australia  soon  after 
The  UnitedStateamonetary  commission  of  1876 reported 
'  '  '"  r  increased  in  purchasing  poT       '■' 


r  with  which  to  repay. 

^  very  essence  of  good  money  i 

[uality,  a-s  compared  with  all  other  pure 


of  sound  and  hones 


ply,  which  invariably 


H'y  loaned  nmh- 
y  gradually 


a  between  it  and 


and  prosperity  in  every  civilized  and  semicivilized  ci 
r  bad  been  witneseed  before. 


CONGRESS  ION AL  EECOED. 


And  yet  this  did  not  bring  nniversal  happiness  and  ron^nt- 
ment.  The  annuitant  and  bondholder  of  Europe  complained  to 
their  Governments  that  by  the  combined  use  or  gold  and  Tilver 
as  money  the  general  prices  of  the  necessaries  of  life  would 
range  too  high,  making  their  incomes  and  their  annuities  Suy  a 


In  piirsuance  of  this  determination  Germany  and  Anstrin  de- 


With  equal  anxiety  they  watched  the  purchasing 
power  of  their  annnities  and  annual  interest  collectiooB  gojdown 
and  down  as  the  outpouringof  the  gold  from  the  mine*  so  rapidly 
increased  the  volume  of  legal -tender  money  in  the  world  anfl  gen- 
eraj  prosperity  and  the  prices  of  general  property  and  labon 
up  and  up  in  proportion  to  this  increased  money  supply. 

During  these  contrasting  periods  the  inflexible  econom 
pie  that  any  increase  in  the  volume  of  money  increases  t 
of  general  property  and  any  decrease  in  the  money  supply,  a:!" 
pared  with  the  population  and  quantity  of  property  and  Ir 
be  exchanged,  likewise  decreases  the  general  prices  of  propei 
labor,  was  so  burnt  into  the  quick  and  marrow  of  the  ow 
ready  money,  securities,  and  those  receiving  annuities,  thajt  they 
redoubled  their  efforts  to  destroy  the  money  functions  of 
the  metals.    They  preferred  to  destroy  gold,  but  could  n 
hence,  in  1865,  they  firmly  moved  on  silver,  not  because 
depreciated,  because  it  was  then  at  a  premium  over  gold, 
the  sole  purpose  of  making  money  dearer  and  scarcei 
rily  property  and  labor  cheaper  everywhere. 

The  minority  of  the  French  monetary  commission  of  l| 

ported  to  its  Govermnent  to  this  effect,  and  declared  that  'oy  the 
use  of  the  two  metals  for  money  that  it  made  general  pr  aperty 
high  and  injuriously  affected  that  class  of  people  having  fijced  in- 
comes and  nothing  to  sell  but  everything  to  buy. 

The  United  States  Monetary  Commission  of  1876  repo-  ted  to 
Congress,  among  many  other  things,  as  follows: 

Manifestly  the  real  reason  for  the  demr>netization  of  silver  was  th  ^  appre- 


>  creditor  c 


9  would  I 


lending  classes)  i. 


liBtinctlv 

These  reasons,  so  conspicuously  stated  when  the  annuitailits  and 
creditors  were  trying  to  establish  a  silver  standard  and  whi-n  they 

,  i:_„. ,j  ..__j._^ .,. .o    ..__.      ^  ^g 

toilers  generallV  until  they  see  the  true  cause  of  our  disti 
correctly  spot  the  special  classes  fastening  it  upon  the  wor  „. 

Gold  and  silver  money  of  practically  the  present  standar  i  val 
constituted  the  legal-tender  money  of  this  Govermnent  fi  ■__ 

foundation  down  to  the  destruction  of  silver  in  1873.    Tha    it 

destroyed  without  the  knowledge  or  request  of  the  peor  le.  and 
simultaneously  with  the  destruction  by  so  many  nations  in  I  lurope, 
is  conclusive  that  the  objects  sought  ""  '^'""  "^--^-^  '^'--'  ~  •  • 
Europe  were  in  pursuance  of  a  comn 
international  money  power  to  destroy  silver;  not  because 
depreciated,  for  it  wae  then  at  a  premium  of  3  cent's  ab 
price  it  was  proportioned  to  gold  by  the  parity  act. 

With  the  destruction  of  silver  the  producer's  trouble 
As  the  prices  of  his  products  went  down,  the  value  of  mor 
securities  generally,  and  ready  money  went  up.  ^^  " 

The  money  changers  of  the  world  own  $35,000,000,000  boi  ads  and 
debts  of  the  different  national  governments,  which  they  ha.  ve  been 
trying  for  a  quarter  of  a  century  to  reduce  to  gold  debts  by  hav- 
ing the  contracts  actually  changed  by  legislatures,  and  wh  en  that 
can  not  be  done,  by  having  the  executive  branches  of  the  )  govern- 
ments do  as  they  induced  ours— that  is,  adopt  a  goverr  uuental 
policy  of  allowing  the  creditor  and  bondholder  to  choose  t  he  kind 
of  money  he  will  accept  on  hia  debt. 

7  of  tlie  le^rdemain  used  by  our  Gove  rnment 


atheii 


t  of  and  at  the  dictation  of  our  bondholders  d 


Uy  serve 
s  ociated 


to  he  steered  under  the  money-changer's  compass.    They  system- 
atically and  premeditatedly  stranded  it  upon  a  rock  of  th  eir  own 
choosing,  where  they  can  d.aily  loot  the  Treasury. 
When  Lincoln  and  Chase  as  a  dernier  reasort  eecnred  t  he 


of  $60,000,000  in  noninterest-bearing  greenbacks  or  demand  notea, 
and  afterwards  made  them  full  legal  tenders  and  receivable  for 
import  duties,  it  brought  every  professional  money-changer  and 
banker  of  the  land  to  his  feet.  Thev  peremptorily  demanded  and 
secured  an  exception  clause  in  all  subsequent  issues,  making  them 
partial  legal  tenders,  not  acceptable  for  import  duties  or  for  the 
interest  on  our  public  debt  by  them  held.  The  first  notes  never 
depreciated  ana  no  speculator  ever  made  a  dollar  out  of  them,  bat 
those  with  the  banker's  exception-clause  dictation  were  by  him  de- 
preciated and  bought  in  for  an  average  of  about  68  cents  on  the 

They  secured  an  act  of  Congress  permitting  them  to  exchange 
these  depreciated  greenbacks  for  interest-bearing  bonds    ' 


of  these  bonds,  however,  in  some  mysterious  way  secured  the 
demonetization  of  silver  in  1873,  covertly,  without  even  the  vigi- 
lant newspaper  representatives  detecting  the  act.  This  was  not 
sufficient,  however,  because  their  bonds  bylaw  and  upon  their  face 
were  payable  in  gold  or  silver  of  the  standard  value  of  July  14, 
1870,  and  even  the  new  bonds  issued  by  Secretary  Carlisle  are  so 
payable,  because  the  act  under  which  they  were  issued  provides 
that  all  bonds  issued  or  hereafter  to  be  issued  shall  be  payable  in 
coin  of  the  standard  value  of  July  14, 1870,  including  the  standard 
silver  dollar.  The  inflexible  rule  of  law  is  that  any  or  all  debtors, 
public  or  private,  may  choose  any  kind  of  legal-tender  money  for 
the  payment  of  their  debts,  and  their  creditors  are  compelled  to 
accept  the  money  offered.  The  bondholder  fully  recognized  thia 
rule  of  law,  but  plaintively  appealed  to  Secretary  Hugh  McCnlloch 
under  the  fraudulent  guise  of  an  honest-money  league  that  the 
Government  pay  its  creditors  in  any  kind  of  money  they  might 
desire.  He  promptly  decided  to  adopt  a  governmental  policy  dif- 
ferent from  every  other  government  of  earth  of  allowing  the 
creditor  instead  of  itself  to  choose  the  kind  of  legal-tender  money 
it  will  accept. 

They  lately  secured  the  decision  of  the  Secretary  that  he  has 
the  right  to  issue  interest-bearing  bonds  for  the  ostensible  pur- 
pose of  redeeming  greenbacks,  but  really  to  pay  the  expenses  of 


of  present  conditions  will  be  ine\'itably 


doned  for  a  so-called  public  policy,  dictated  by  and  for  the  special 
benefit  of  the  great  creditor  classes  of  the  world.  This  poUcy  is 
not  that  of  the  law,  but  dictated  by  a  class  of  men  schooled  and 
tutored  only  in  handling  ready  money  for  hire  rather  than  invest- 
ments in  developing  enterprises.  Had  good  fortune  smiled  on  the 
masses  rather  than  theclasses  in  the  last  Presidential  campaign  and 
have  placed  in  the  Executive  chair  a  Jones,  a  Morgan,  a  Hab- 
Eis.  a  Teller,  or  a  Richard  P.  Bland,  instead  of  the  present 
incumbent,  the  country  woiild  have  had  a  complete  reversal  of 
policies  and  conditions.  The  debta  of  the  Government  would 
have  been  paid  in  gold  and  sUver  at  the  option  of  the  Govern- 
ment; the  seignioragewould  have  been  coined  and  paidout  on  cur- 
rent expenses.  We  would  have  had  no  gold  scramble,  no  repeal 
of  the  Sherman  act  without  something  better  as  a  substitute,  no 
bond  issue,  no  shutting  down  of  mines,  mills,  and  manufactures,  no 
bankers'  panic,  and  no  Carlisle  bill. 

No  well-informed  person  can  have  the  temerity  to  deny  that  this 
would  have  been  the  course  of  any  one  of  these  gentlemen,  or  to 
assert  that  any  one  of  them  has  less  patriotism,  less  covemmental 
experience,  less  ability,  or  has  been  leas  successful  in  the  correctness 
of  his  governmental  forec  aste  than  the  present  distinguished  Execu- 
tive. With  all  due  deference  1  will  ask,  Why  all  of  this  cringing 
to  the  one-man  power?  It  is  subversive  and  destructive  of  a  re- 
publican form  of  government.  What  has  become  of  all  of  the  dire 
threats  of  members  of  this  House,  if  bonds  wereissued  without  the 
consent  of  Congress?  Whither  are  all  those  grandiloquent  silver 
pledges  finding  such  secure  hiding  places  since  the  election? 
Were  these  sincere?  Have  so  many  changed  their  convictions 
since  November,  or  were  they  mere  electioneering  paraphrases? 
Every  specific  the  Executive  furnished  has  betrayed 


him  by  a  majority  of  his  o\vn  party  lawmakers  from  the  House 
and  from  the  Senate,  was  arrogantly  vetoed  and  cast  away  as 
trivial  and  dangerous. 


m 


Cj 


lONAL  KEOORD. 


of  $60,000,000  in  mninterest-bearing  greenbacks  or  demand  notes, 
and  afterwards  made  them  full  legal  tenders  and  receivable  for 
import  duties,  it  brought  every  professional  money-changer  and 
banker  of  the  land  to  his  feet.  They  peremptorily  demanded  and 
secured  an  excei)tion  clause  in  all  subseciuent  issues,  making  them 
partial  legal  tenders,  not  acceptable  for  import  duties  or  for  the 
interest  on  our  public  debt  by  them  held.  The  first  notes  never 
depreciated  and  no  speculator  ever  made  a  dollar  out  of  them,  but 
those  with  the  banker's  exception-clause  dictation  were  by  him  de- 
preciated and  bought  in  for  an  average  of  about  68  cents  on  the 
dollar. 

They  secured  an  act  of  Congress  permitting  them  to  exchange 
these  depreciated  greenbacks  for  interest-bearing  bonds  at  par. 
These  bonds  were  purchased  with  greenbacks  and  upon  their  face 
made  payable  in  ' '  lawful  money. "  The  owners  of  these  bonds  cun- 
ningly, under  an  ostensible  aim  to  strengthen  the  public  credit,  se- 
cured a  Congressional  act  on  Jiily  14,  1870,  making  them  payable 
in  coin  of  the  standard  value  of  that  day,  which  included  our  pres- 
ent standard  silver  dollar  with  our  gold  coin.  The  public  thought 
but  little  of  this,  because  silver  was  at  that  time  more  valuable 
than  gold,  according  to  the  established  ratio  of  16  to  1.  The  own- 
ers of  these  bonds,  however,  in  some  mysterious  way  secured  the 
demonetization  of  silver  in  1873,  covertly,  without  even  the  vigi- 
lant newspaper  representatives  detecting  the  act.  This  was  not 
sufficient,  however,  because  their  bonds  bylaw  and  upon  their  face 
were  payable  in  gold  or  silver  of  the  standard  value  of  July  14, 
1870,  and  even  the  new  bonds  issued  by  Secretary  Carlisle  are  so 
payable,  Ijecause  the  act  under  which  they  were  issued  provides 
that  all  bonds  issued  or  hereafter  to  be  issued  shall  be  payable  in 
coin  of  the  standard  value  of  July  14, 1870,  including  the  standard 
silver  dollar.  The  inflexible  rule  of  law  is  that  any  or  all  debtors, 
public  or  private,  may  choose  any  kind  of  legal-tender  money  for 
the  payment  of  their  debts,  and  their  creditors  are  compelled  to 
accept  the  monej'  offered.  The  bondholder  fully  recognized  this 
rule  of  law,  but  plaintively  appealed  to  Secretary  Hugh  McCulloch 
under  the  fraudulent  guise  of  an  honest-money  league  that  the 
Government  pay  its  creditors  in  any  kind  of  money  they  might 
desire.  He  promptly  decided  to  adopt  a  governmental  policy  dif- 
ferent from  every  other  government  or  earth  of  allowing  the 
creditor  instead  of  itself  to  choose  the  kind  of  legal-tender  money 
it  will  accept. 

They  lately  secured  the  decision  of  the  Secretary  that  he  has 
the  right  to  issue  interest-bearing  bonds  for  the  ostensible  pur- 
pose of  redeeming  gi-eenbacks,  but  really  to  pay  the  expenses  of 
the  Government,  and  then  to  reissue  them  ad  infinitum.  With 
all  of  the  Treasury  machinery  rigged  in  the  interest  of  the  Treas- 
ury looters,  a  continuance  of  present  conditions  will  be  inevitably 
ruinous. 

But  the  laws  are  not  so  blamable  as  the  law  officers  of  the 
Government.  The  letter  and  spirit  of  the  laws  have  been  aban- 
doned for  a  so-called  public  policy,  dictated  by  and  for  the  special 
benefit  of  the  great  creditor  classes  of  the  world.  This  policy  is 
not  that  of  the  law,  but  dictated  by  a  class  of  men  schooled  and 
tutored  only  in  handling  ready  money  for  hire  rather  than  invest- 
ments in  developing  enterprises.  Had  good  fortune  smiled  on  the 
masses  rather  than  the  classes  in  the  last  Presidential  campaign  and 
have  placed  in  the  Executive  chair  a  Jones,  a  Morgan,  a  Har- 
ris, a  Teller,  or  a  Richard  P.  Bland,  instead  of  the  present 
incumbent,  the  country  would  have  had  a  complete  reversal  of 
policies  and  conditions.  The  debts  of  the  Government  would 
have  been  paid  in  gold  and  silver  at  the  option  of  the  Govern- 
ment; the  seigniorage  would  have  been  coined  and  paid  out  on  cur- 
rent expenses.  We  would  have  had  no  gold  scramble,  no  repeal 
of  the  Sherman  act  without  something  better  as  a  substitute,  no 
bond  issue,  no  shutting  down  of  mines,  mills,  and  manufactures,  no 


CONGRESS' 


the  name  of  Democracy  what  hope  and  virtue  are  in  it."  "W 
precise  diagnosis  of  the  party  condition  to-day.  In  the  lif.' 
recent  events,  can  the  "docility  and  zeal  of  the  masses"' 
adore  the  precepts  and  examples  of  Jefferson  and  Jacksoi 
the  benificence  of  pure  Democracy  be  further  impoverishe(' 
enslaved  through  the  glare  of  insane  partisanship  for  a  moi 
1744 


CONGKESSIONAL  RECORD. 


Those  things  are  ennngh  to  cause  the  advocates  of  a  republican 
form  of  government  to  stop  and  inqnire  what  special  traiuinx  or 
qualification  is  required  of  an  Executive?  He  is  not  chosen  to  di- 
rect the  making  of  laws,  hut  rather  to  execute  those  enacted  by 
tlie  law-making  branch  of  the  Government. 

It  is  true  the  Executive  is  expected  to  suggest  defecta  and  pomt 
out  remedies  for  the  consideration  of  Congress,  but  it  never  was 
expected  that  an  Executive  would  pit  his  own  judgment  against 
the  combined  and  deliberate  judgment  of  his  party  m  Congress. 

The  hietorj-  of  this  country  has  shown  for  the  pajit  half  a  cen- 
tmy  that  men  are  not  selected  for  Presidential  nominees  beL^ause 
of  mdindual  greatness,  but  rather  because  of  availability  and 
prospect*  of  carrying  pivotal  States.  Generally  the  leas  national 
record  the  more  availability. 

Witli  all  due  deference  to  those  in  high  places,  their  country- 
men recognize  no  one  in  position  to-day  as  atjinding  out  distmctly 
above  his  fellows  in  morals,  intellect,  or  political  sagacity. 


n  of  life,  and  that  i 


i  has  been  given  by 
on  common  sense  or  ordinary  sagacity. 
>  have  such  is  a  dangerous  imposter  and 


clearly  demonstrates  his  unfitness  for  public  pli 

The  intention  of  our  republican  form  of  goveruun^m.  m  moi.  1.11D 
combined  and  unbiased  judgment  of  Congress,  as  enlightened  by 
an  intelligent  and  practical  confltituency,  should  furnish  the  gov- 
emmentid  policy  and  the  specific  for  the  country's  legislativemala- 

The  President,  because  he  hails  from  the  great 


F  hiso 

interest  of  the  banier  and  n ,  _.     ,_, 

not  even  go  far  enough  to  fill  the  measure  of  their  greed,  but  it  is 
practically  the  Baltimore  plan. 

The  people,  the  farmers,  the  miners,  and  the  producers  generallj;. 

mand  more  absolute  money 

pendence.    The  great  Fede) 


.  rather  than  an  augmentation  of  corporate  p 
In  a  report  of  the  Committ  "  *  *    "   -  "-- 

Fifty-first  Congress  it  is  said: 


roten,  stepped  forward  and  laid  on  tbe  table  tbe  petition  of  tbese  tolUJig 
The  Transmihs  ssippi  Congress  representing  twenty  two  States 


from  any  one  of  them  about  n 
meeting  of  the  National  Bank 


passage.    Is 


their  general  eincerity? 


this  enough  t 

...r  general  eince  _„ 

In  the  very  inception  of  the  panic  last  spring  the  Secretary  of 
the  Treasury  threatened  to  obey  the  law  and  pay  demands  in  gold 

ir  silver  according  to  the  contract  and   tV  -      ""  

■hangers  threatened  ti 


t  and  the  1 


The  money 
dire  disasters 

threat.    The  Administrution,  vrith  much 

'kness  and  trembling,  made  an  insipid  and  childish  surrender. 


of  thpse  sacred  privileges  o 
of  this  Government,  whether  old  or  new.  is  payable  by  c 


of  Juh- 14, 1870, 


1  of  the  standard  1 
which  is  the  present  gold  and  silver  coine 
back  is  not  payable  in  gold,  but  in  the  sui 
that  the  banker,  the  creditor,  and  the  legislatively  favored  I 
""■  tent  with  their  lot  and  with  "'    '  ... 

'  much  distress  and  misery  g' 
a  keeping  with  vain  hnmau 
"""•" —  *"  their  Bools  that  the  unprecedented  a 


burst  01  inventive  genius  has  applied  labor-saving  machinery  a 
overcome  distanc  '■ 

the  destiny  and  f  1 


distance  by  rapid  ti 


rich  and  powerful  o 
ion  and  of  every  country  have  been  linked  together  for  a  c 

o  aggression  and  defense 

y  great  corporate  ii  ' 

ponding  chord  in  any  oiDf  . 

sented.  regardless  of  indiridual  rights.    No  doubt  but  that 
t«ruational  gold  standard,  with  an  international  banking  system 
dominated  and  owned  by  "■ 
the  destinj^  of  the  world. 


I.  would  aid  them  i 


formerly?    They  ought  t< 
clearly  that  they  f"" 


)  believe  that  the  Democratic  party  of  the 


i  ideal  of  the  old  Democracy  as  we 
all  lovers  of  true  manhood,  proclaimed  that  "bank  paper  n 
suppressedandrestoredtothe  nation  to  whomit  belonged; 
"  tlie  power  to  issue  money  should  be  t 


•cy  of  banks 


h    people  learned  of  the  disreputal 


threatened  the  perpetuity  of  o 

property  was  at  the  mercy  of 

The  ne  v  Democracy  says  it  would  be  an  ideal  condition 

■o    pletely  di  orce  the  Government  from  banks  of  issue  and  to 

the  whole  responsibility  to  the  banks. 

ill  and  the  conduct  of  this  Administriitinn  evinces  the 

ratic  creed  to  be  promulgated  ami  if  tin'  ji^wt  re^-niil 

r  great  party  ahful  be  the  light  >if  n- fntnn-  mi  tdn 

n  1 18  high  time  indeed  that  from  tin  .lU.iiiiliiind  ;i-1ji-^ 

1  Democracy  of  Jefferson  and  J;ii  k-i.n  .imi  hjm.i,  ih>' 

of  the  Republicanism  of  Lnni-ln  mIhI  rhii-'  ttn' 

he  people  who  weave  and  spin,  mine  and  plow,  and 

ry  caste  who  live  by  labor  were  aligning  themst-lves 

arty  wherein  humanity  iiwtead  of  accumulated  wealth 

a  recognition,  where  the  debtor  as  well  as  the  creditor 


dered,  where  the  laws  1 


mtrodu  ed  a  bill  ' 


e  justified  hie  a 
itroduced  tl 
tbe  passage  of  a  free  silver  bill  at  that  ti 


floor  of  the  Senate  that  he  introduced  the  original 


the  pur 

e  sought 

by  saymg  on  the 


a  declared  pat 
laiiiy   tiiai  me  masses  of  '   " 
i  shonesty  but  that  the  s. 
leaders   that  they  reap  1 

a  wh  ch  they  direct;  that  as  be 
Democrats  have  th    '     ' 
of   vhich  the  phil 
3vot«,"huth(-  can 
popular  party  prcj 
those  liberalities.    They  have  n 


t  the  persons  wlion 
t  the  ends  which  give  U 


G 


CONGRESSIONAL  KECOED. 


the  niune  of  Democracy  what  hope  and  vu-tue  are  in  il.  What  a 
precise  diagHMia  of  the  party  condition  to-day.  In  the  li.fht  « 
recent  events,  can  the  "dooUity  and  zeal  of  the  masses  who 
adore  the  precepts  and  examples  of  Jefferson  and  Jackson  anrt 
(luuio  1 1 Ti.^„„„„o„„  hfl  fnrtlipr  imnnvpnahed  and 


adore  the  precepts  ana  examples  oi  jeneroou  ouu  «a.^n^"„  ...... 

thebenifioenceof  pnre  Democracy  be  further  impoverished  and  .  ••—••■■•■■■••■ 
endaved  through  the  glare  of  insane  partisanship  for  a  moneyed  I  the  founders. 


oligarchy,  and  will  they  continue  their  '■-!...! 
the  heavens  fall?    I  think  there  is  a  linnl 
partisan  endurance  and  that  it  has  been  iil'. 
party  will,  that  some  party  must  pres'^nt  m. 
who  will  have  at  heart  the  true  and  puic  Del 


'1,I0XAL  RECORD. 


tehat  a 
3d:ht  of 
'il--  who 
'o\  and 
'Ui  and 

tl 

?^     < 

m( 
I  ; 

3'lF 

■it 
•ef 
t-* 

^no 
as' 
lo: 
as 
dc 
ipi 


oligarchy,  and  will  they  contintie  thoir  ''  docility  and  zeal "  though 
the  heavens  fall?  I  think  there  is  a  limit  even  to  political  and 
partisan  endurance  and  that  it  has  lH>en  about  reached;  that  some 
party  \viY\.  that  some  pai'ty  must  i)res'>nt  men  in  the  coming  years 
wlio  wiU  have  at  heart  tliu  true  and  pure  Democracy  as  taught  by 
the  founders. 


pr 
<  c 
bo 

fcy 

ler 

tt 

)n 

t; 

t 

.u1 

JCt 
3P 

c;e« 

.•t€ 


ml 
soJ 


its 
■n 

t 

rs 
'.at 
d. 

01 

i 
le 

ai 

e  ( 
i1 


The  Currency. 
SPEECH 

OF 

HON.    0.    K.    BELL, 

OF    TEXAS, 

In  the  House  of  Kepresentatives, 

Saturday,  December  23,  1894. 

The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8149)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes — 

Mr.  BELL  of  Texas,  said: 

Mr.  Chairman:  It  is  a  noticeable  fact  that  no  gentleman  who 
has  addressed  this  body  in  favor  of  the  pending  measure  has  failed 
to  inform  ns  that  it  does  not  meet  with  his  approval.  As  the 
members  of  the  committee  who  reported  the  bill  under  considera- 
tion have  endeavored  to  explain  its  incongriiities  and  to  reconcile 
its  conflicting  pro\-isions  I  was  reminded  of  Touchstone's  quaint 
but  affectionate  introduction  of  Audrey  to  the  exiled  Duke  in  the 
forest  of  Arden: 

A  poor  virgin,  sir,  an  ill-favored  thing,  sir,  but  mine  own;  a  poor  humor 
of  mine,  sir,  to  take  that  that  no  man  else  will. 

Not  being  biased  by  the  pride  of  paternity  nor  embarrassed  with 
the  responsibilities  of  sponsorship  for  the  proposed  legislation, 
Und  believing  that  its  operation  would  be  injurious  to  those  I  rep- 
resent as  well  as  to  the  American  people  in  general,  I  shall  attempt 
to  antagonize  it  in  all  its  material  provisions. 

Most  of  the  defects  in  the  bill  have  been  commented  upon  but 
there  are  some  points  to  which  I  desire  to  invite  renewed  atten- 
tion, and  some  objections  which  I  wish  to  further  elaborate.  Be- 
fore proceeding  to  do  so  I  desire  to  submit  a  few  observations 
with  reference  to  the  general  subject-matter  under  discussion. 

Money  performs  three  different  functions.  First,  it  serves  as  a 
medium  of  exchange,  as  when,  having  a  surplus  supply  of  a  given 
commodity,  we  sell  it  for  money  in  order  that  we  may  obtain  that 
with  which  we  can  purchase  something  we  desire;  second,  it 
serves  as  a  means  of  expressing  the  relative  value  of  different  com- 
modities; and,  third,  it  serves  to  liquidate  contracts  for  future 
performance. 

In  order  to  properly  iierf orm  these  functions  money  should  pos- 

1728  1 


389390 


2 

Bess  some  intrinsic  valne,  and  should  be  of  the  substance  that  is 
the  least  liable  to  fluctuate  in  value.  By  general  consent  gold  and 
silver  have  been  found  to  possess  these  essential  requisites  to  a 
greater  degree  than  any  other  commodity.  Of  course,  they  are 
not  absolutely  stable  in  their  value,  but  they  are  more  nearly  so 
than  any  other  commodity.  Paper  is  simply  the  representative  of 
the  coin  into  which  it  can  be  converted.  It  has  no  appreciable  in- 
trinsic value,  and.miless  it  was  redeemable  in  something  that  has 
it  would  fluctuate  in  value  to  such  an  extent  that  no  one  could 
safely  make  a  contract  for  future  performance  and  agree  to  pay  or 
receive  payment  in  it;  but  as  long  as  the  currency  is  certainly  and 
instantly  convertible  at  the  will  of  the  holder  into  real  money  it 
is  more  convenient  to  use  and  more  acceptable  to  intelligent  peo- 
ple than  is  the  coin  in  which  it  is  redeemable.  Manifestly,  there 
must  be  a  limitation  of  the  quantity  of  paper  money  issued,  or  its 
convertibility  into  coin  can  not  be  maintained,  because  the  quan- 
tity of  the  precious  metals  which  can  be  used  as  money  is  limited 
by  the  decrees  of  nature,  which  have  fixed  the  amount  of  them  ob- 
tainable at  any  given  time.  The  question  then  is,  can  the  quan- 
tity of  the  paper  money  be  better  determined  audits  convertibility 
better  maintained  by  the  Government,  acting  through  its  officials, 
or  by  some  agency  established  by  the  Grovernment  with  avtthority 
to  issue  it? 

The  volume  of  currency  which  can  be  floated  in  any  community 
or  nation  is  the  amount  that  can  be  more  conveniently  and  profit- 
ably used  as  a  representative  of  money  than  can  the  real  money 
for  which  it  can  be  exchanged.  As  I  have  stated,  as  long  as  cur- 
rency is  convertible  into  coin  on  demand  and  as  long  as  there  is 
no  doubt  of  either  the  ability  or  of  the  disposition  of  those  upon 
whom  the  burden  of  redemption  rests  to  promptly  and  certainly 
comply  with  their  contract,  inasmuch  as  it  is  more  convenient  to 
handle,  it  will  be  used  instead  of  that  of  which  it  is  the  repre- 
sentative. 

If  money  can  be  made  to  j-ield  its  owmer  a  better  return  by  being 
put  to  some  other  tise,  as  by  being  manufactured  into  salable  arti- 
cles, it  will  be  devoted  to  that  purpose,  and  if  it  can  be  loaned  on 
more  satisfactorj'  terms  elsewhere  it  will  be  sent  there.  In  other 
words,  the  law  of  sup])ly  and  demand  applies  to  money  as  to  every- 
thing else. 

If  there  is  more  currency  than  can  be  used  at  a  greater  profit , 
than  can  the  coin  into  which  it  can  be  converted,  the  surplus  cur- 
rency will  be  converted  into  coin,  which  Avill  be  exported  to  a  for- 
eign countrj'  or  used  in  the  arts,  or  in  such  other  manner  as  may 
be  most  advantageous  to  its  ownier. 

If  our  people  could  use  $1,000,000,000  of  currency  to  a  greater 
advantage  in  their  business  transactions  than  they  could  by  ex- 
changing a  part  of  it  for  coin  and  using  the  coin  in  the  arts,  or  by 
sending  it  to  some  other  country,  the  whole  billion  dollars  woiild 
be  allowed  to  remain  in  circulation. 

But  if  only  one  billion  dollars  of  currency  could  be  so  used,  and 
a  greater  quantity  should  be  put  out,  as,  for  instance,  one  billion 
one  hundred  million  dollars,  the  surplus,  one  hundred  million, 
which  could  not  be  profitably  employed,  would  be  converted  into 
coin,  and  the  coin  used  in  some  way  which  would  yield  the  owner 
a  greater  profit  than  would  the  currency  which  had  been  ex- 

1728 


chaiigetl  for  it.  Manifestly,  as  long  as  the  paper  currency  will 
pass  without  question  in  business  transactions  it  displaces  to  the 
extent  of  its  circulation  just  so  much  other  money,  and  similarly, 
to  the  extent  of  their  circulation,  bank  bills  displace  the  national 
currency. 

No  one  in  this  country  in  his  biTsiness  affairs  ever  inquires  as 
to  whether  the  money  which  he  receives  is  a  national-l^ank  bill  or 
a  United  States  note,  for  the  simple  reason  that  each  of  them  can 
be  converted  into  coin.  There  are  at  present  in  circulation  in  the 
United  States  $346,681,016  United  States  notes,  commonly  called 
greenbacks,  and  $151,609,267  in  Treasury  notes,  commonly  called 
Sherman  bills. 

The  distinctive  feature  of  the  measure  under  consideration  is 
that  it  provides  for  the  retirement  of  this  currency  and  the  sub- 
stitution of  national-bank  bills  in  lieu  of  it.  There  are,  of  coiirse, 
many  other  provisions  in  the  bill,  but  this  is,  as  I  say,  its  distinc- 
tive feature. 

There  have  been  a  number  of  amendments  siTbmitted  by  the 
Committee  on  Banking  and  Currency,  by  which  it  is  intended  to 
improve  the  bill.  I  think  that  most  of  them  have  the  contrary 
effect,  but  I  shall  disciiss  the  measure  upon  the  theory  that  they 
will  be  adopted. 

The  first  section  of  the  bill  provides  that  national  banks  which 
accept  the  provisions  of  the  act  shall  not  be  required  to  deposit 
bonds  for  the  purpose  of  securing  their  circulation. 

When  the  national  banking  law  was  originally  passed  the  re- 
quirement that  bonds  should  be  deposited  for  the  purpose  of  se- 
curing their  circulation  was  intended  for  two  purposes:  First,  to 
'  provide  a  market  for  and  to  enhance  the  price  of  Government 
bonds,  and,  second,  to  seciu-e  the  bank  notes.  As  the  Government 
is  no  longer  interested  in  having  its  bonds  command  a  premium » 
the  first  reason  for  requiring  the  deposit  of  bonds  does  not  now 
exist,  and  the  question  then,  assuming  that  banks  should  be  au- 
thorized to  issue  currency,  is,  would  the  notes  of  the  banks_  be 
made  secure  by  the  safeguards  and  limitations  proposed  to  be  im- 
posed upon  their  issuance  ? 

It  is  provided  that  national  banks  shall  be  authorized  to  issue 
currency  to  the  amount  of  75  per  cent  of  their  paid-up  and  unim- 
paired capital  upon  their  depositing  with,  the  Treasurer  of  the 
United  States  a  portion  of  that  part  of  the  United  States  currency 
which  is  redeemable  in  gold  to  the  amount  of  30  per  cent  of  the 
circulation  applied  for.  This  30  per  cent  is  held  for  the  purpose 
of  securing  the  circulation  of  the  banks.  It  is  manifest  that  there 
will  only  be  53i  per  cent  of  the  notes  issued  without  seciirity;  and 
the  question  is,  would  the  guaranty  afforded  by  the  assets  of  the 
bank  and  the  provision  for  the  establishment  of  a  safety  fund  be 
sufficient  to  maintain  their  absolute  and  unquestioned  convert- 
ibility? 

I  think  that  whether  the  currency  is  issued  by  the  United  States 
Government,  by  a  national  bank,  or  by  a  State  bank,  it  ought  to 
be  so  secure  that  no  citizen  would  ever  be  called  upon  to  consider 
the  question  as  to  whether  it  was  as  good  as  any  other  money  in 
circulation  or  not.  If  we  have  paper  in  circulation  which  is  not 
so  secure  that  its  immediate  redemption  on  demand  can  be  en- 
forced everyone  is  liable  to  sustain  a  loss  because  he  has  received 

1728 


the  money  of  au  insolvent  or  of  an  embarrassed  institution.  This 
ought  not  to  be.  All  any  citizen  should  be  required  to  do  is  to  ex- 
ercise precaiition  in  seeing  that  the  bill  is  not  counterfeit,  and  if 
it  be  a  genuine  bill  he  oiaght  to  know  that  the  power  which  issued 
it  or  which  authorized  its  issuance  is  ready  to  make  good  to  him 
any  loss  that  he  might  sustain  from  having  received  it. 

It  is  contended  by  the  advocates  of  this  bill  that  because  under 
the  national  banking  laws,  which  have  been  in  existence  for  over 
thirty  years,  the  total  amount  of  loss  from  circulation  of  failed 
banks,  if  there  had  been  no  requirement  of  bond  deposit,  would 
have  been  very  small  and  much  less  than  the  sum  which  would 
be  collected  by  the  tax  which  is  pro\dded  for  the  puri)ose  of  accu- 
mulating the  safety  fund,  therefore  the  safety-fund  provision  will 
render  the  notes  that  may  hereafter  be  issued  perfectly  secure.  I 
do  not  think  this  correct. 

Heretofore  there  has  been  no  inducement  to  organize  banks  with 
a  Anew  of  making  money  by  failing,  but  under  the  provisions  of 
the  proposed  bill  it  would  be  very  different.  Let  us  suppose  that 
five  unscrupulous  men  organize  abank  with  $100, 000  capital.  Thej' 
would  be  authorized  to  issue  $75,000  in  bank  bills  on  depositing 
$22,500  United  States  notes.  After  these  bills  are  in  circulation 
they  could  absorb  the  assets  of  the  bank  and  make  $52,500  by  the 
transaction.  This  is  ample  inducement  to  cause  many  adventu- 
rers to  iindertake  the  scheme.  However,  it  is  said  that  there  would 
be  a  safety  fund  accumulated  in  order  to  pay  off  the  notes  issued 
bj'  such  banks  as  fail.  But  when  would  there  be  an  adequate  accu- 
miilation  of  this  fund,  and  who  is  to  redeem  the  notes  of  the  failed 
banks  while  the  safety  fund  is  being  accumulated?  It  would  neces- 
sarily be  many  years  before  the  tax  of  one-half  of  1  per  cent  per 
annum  on  the  circulation  of  banks  organizing  under  the  proposed 
act  would  amount  to  enough  to  make  the  safety  fund  <*  guarantee 
of  the  immediate  redemption  of  the  notes  of  failed  banks,  and,  of 
course,  everyone  understands  that  when  a  bank  fails,  however 
solvent  it  may  be.  it  generally  takes  months  to  collect  even  a  small 
portion  of  its  assets,  and  in  the  meantime  the  holders  of  the  notes 
of  the  failed  bank  would  have  to  discount  them,  if  they  do  not  lose 
them  altogether. 

The  original  bill  provided  for  an  assessment  of  the  associated 
institutions  to  raise  a  fund  with  which  to  redeem  the  notes  of  de- 
funct banks,  and  that  would  have  rendered  them  reasonably  safe; 
biit  it  vnll  be  observed  that  the  amendments  submitted  by  the 
committee  limit  the  amount  that  can  be  collected  from  the  other 
banks  to  one-half  of  1  per  cent  per  annum  of  their  circulation. 

The  banks  now  have  to  pay  a  tax  of  1  per  cent  per  annum  upon 
their  circulation.  The  difference  between  the  present  and  pro- 
posed tax  would  be  enoiTgh  to  induce  the  banks  to  take  out  circu- 
lation under  the  new  law,  especially  since,  as  I  will  show  later  on, 
the  premium  commanded  by  the  bonds  which  they  are  compelled 
to  deposit  is  such  that  there  is  no  profit  in  issuing  currency  under 
existing  conditions. 

Another  section  of  the  bill  gives  a  first  lien  upon  all  the  assets 
of  the  bank  to  secure  the  notes.  As  these  notes  have  to  be  redeemed 
in  the  first  instance  by  the  api)lication  of  the  money  in  the  sinking 
fund,  there  would  be  a  lien  in  favor  of  the  sinking  fund  upon  all 
the  assets  of  the  bank  which  would  be  prior  to  the  lien  of  depos- 

1728 


itors;  and  since  the  collection  of  the  tax  on  circulation  is  to  be 
suspended  as  soon  as  an  amount  equal  to  5  per  cent  of  the  total 
circulation  is  accumulated,  this  would  give  the  banks  a  lien  prior 
to  all  other  creditors. 

The  Government  in  authorizing  them  to  issiie  currency  confers 
a  great  and  valuable  privilege  on  the  banks,  equivalent  to  a  loan 
without  interest  of  the  unsecured  portion  of  their  paper,  and  yet 
it  is  proposed  that  banks  which  voluntfft'ily  become  partners  in 
the  issuance  of  the  currency  shall  have  a  lien  prior  to  that  of  the 
depositors  and  other  creditors  who  receive  no  similar  favors. 
Nothing  could  be  more  unjust  or  unreasonable. 

It  is  also  i3roposed  to  repeal  the  tax  on  circulation.  Last  year 
this  tax  brought  to  the  Treasury  $1,721,095.18,  and  now,  while  our 
expenditures  are  largely  exceeding  our  receipts,  what  excuse  can 
there  be  for  releasing  this  just  source  of  revenue?  Mark  you,  this 
is  not  a  tax  on  the  banking  business,  but  only  on  their  circiilation. 
The  Government  is  put  to  great  expense  anniially  on  account  of 
the  banks,  and  it  is  but  right  that  they  shoiild  contribute  some- 
thing in  return;  and  yet,  if  the  pending  bill  is  adopted,  the  banks 
will  cease  to  pay  to  the  National  Government  anything  for  the 
privilege  of  issiiing  currency,  while  the  exi:)enses  which  they  occa- 
sion will  be  continued.  This  is  so  inequitable  and  unfair  that  I 
can  not  understand  how  it  can  receive  the  support  of  anyone. 

Of  course,  all  understand  that  the  requirement  that  a  certain 
amount  of  United  States  currency  must  be  deposited  to  secure 
the  circulation  of  the  banks  is  intended  primarily  for  the  purpose 
of  removing  what  is  called  the  drain  iipon  the  gold  reserve.  Cer- 
tainly the  remedy  proposed  is  utterly  inadequate.  There  are,  as 
■  I  have  stated,  about  $500,000,000  of  currency  in  circulation,  which 
can  be  used  to  drain  the  gold  from  the  Treasury.  If  all  but 
$100,000,000  of  this  should  be  sequestered  under  the  provisions  of 
this  bill  that  would  be  sufficient  to  enable  those  who  desire  to  do 
so  to  take  out  of  the  Treasury  all  of  the  gold  that  could  be  ac- 
cumulated there  as  long  as  the  bills  when  redeemed  are  reissued, 
and  it  is  not  claimed  by  anyone  that  over  a  third  of  the  $500,- 
000,000  referred  to  would  be  used  in  taking  out  circulation.  In- 
stead of  reducing  the  drain  upon  the  gold  reserve,  the  new  law 
would  aggravate  it.  If  there  was  any  considerable  increase  in 
the  volume  of  the  bank  notes,  to  the  extent  of  their  circulation 
and  by  taking  their  place  and  serving  in  their  stead,  they  would 
displace  the  national  currency  in  which  they  would  be  redeem- 
able, which  would  cause  the  United  States  and  Treasury  notes  to 
be  converted  into  coin,  and  thus  deplete  the  Treasury  of  its  re- 
demption fund. 

However,  I  am  devoting  too  miach  time  to  defects  which  are 
not  fundamental,  which  could  be  cured  by  amendments  and 
which,  from  the  readiness  with  which  those  having  charge  of  the 
bill  acquiesce  in  other  alterations  of  their  work,  we  may  reason- 
ably hope  to  see  remedied. 

The  most  objectionable  feature  in  the  measure,  in  my  judgment, 
is  that  which  proposes  to  repeal  the  ninth  section  of  the  act  of 
1882,  which  prohibited  the  banks  of  the  country  from  retiring 
their  circulation  to  a  greater  extent  than  $3,000,000  a  month.  No 
more  dangerous  power  could  be  conferred  upon  any  set  of  men 
than  that  which  would  give  them  control  over  the  volume  of 
1728 


6 

money  in  circulation  in  a  country.  This  is  no  new  question.  It 
has  been  discussed  time  and  again,  and  it  is  impossible  to  advance 
any  new  argument  concerning  it. 

While  the  volume  of  money  in  circulation  in  a  country  does  not 
absolutely  control  the  price  of  commodities,  it  is  universally  ad- 
mitted that  it  affects  them.  The  ability  to  gi-eatly  increase  the 
quantity  of  money  could  be  so  used  as  to  compel  the  creditor  to 
accept  pajTuent  in  a  mSdium  of  much  less  purchasing  power  than 
it  had  when  the  contract  was  made.  The  ability  to  decrease  the 
quantity  of  money  could  be  so  used  as  to  compel  the  debtor  to  pay 
in  a  medium  of  much  greater  pui'^hasing  power  than  it  possessed 
when  he  contracted.  The  evil  effects  of  the  contraction  and  ex- 
pansion of  the  currency  have  been  often  shown.  In  speaking  on 
this  subject,  and  having  reference  to  the  contraction  and  expan- 
sion of  the  currency  indulged  in  by  the  banks  of  issue  during  his 
day,  Mr.  Webster  said: 

It  is  hardly  necessary  to  dwell  upon  the  evils  of  a  suddenly  diminished  cir- 
culation. It  arrests  business;  puts  an  end  to  it,  and  overwhelms  all  debtors 
by  the  depression  and  downfall  of  prices;  and  even  if  we  reduce  circulation 
not  suddenlv.  but  still  reduce  it  further  than  is  necessary  to  keep  within  just 
and  reasonable  limits,  it  would  produce  many  mischiefs;  it  would  augment 
the  necessity  of  foreign  loans;  would  contract  business,  discoui-age  enter- 
prises, slacken  the  activity  of  capital,  and  restrain  the  commercial  spirit  of 
the  country. 

But  the  evil  effects  of  the  proposed  law  would  not  be  confined  to 
cases  of  actual  contraction  of  the  currency.  The  very  fact  that 
it  was  in  the  power  of  a  small  number  of  persons  to  decrease  or 
increase  greatly  the  supply  of  money  would  deter  prudent  men 
from  engaging  in  large  enterprises,  This  matter  was  investigated 
in  1857  in  England  by  the  select  committee  on  the  banking  acts, 
and  the  e\i[  effects  which  would  result  from  confeiTing  authority 
like  that  proposed  to  be  conferred  in  the  pending  measure  upon 
the  bankers  is  vei-y  clearly  expressed  by  Lord  Overstone.  He  was 
asked:  "  The  practical  question  with  regard  to  this  matter  is,  how 
far  the  tendency  of  the  control  of  bankers  over  issues  is  dangerous, 
and,  therefore,  requires  to  be  restrained  by  positive  law?" 

He  answered:  "I  have  no  hesitancy  in  giving  my  opinion  upon 
that  point — that  the  bankers  intrusted  ^ith  the  power  of  issue 
are  intrusted  -svith  a  power  of  a  very  formidable  and  a  very 
dangerous  character;  one  that  has  been  repeatedly  abused,  and 
by  the  abuse  of  which  the  public  has  repeatedly  suffered  serious 
injury." 

But  it  is  not  necessary  for  us  to  conjecture  as  to  what  might 
happen  if  the  banks  could  increase  and  decrease  their  circulation 
without  some  reasonable  restraint.  Rather  l^t  lis  see  what  has 
happened.  For  some  years  prior  to  1883  there  was  no  limitation 
of  the  time  in  which  the  banks  coiild  retire  their  circulation.  In 
1881  a  bill  was  passed  by  both  Houses  of  Congress  providing  for 
the  refunding  of  the  interest-bearing  national  debt  on  terms  which 
were  iinsatisf actor y  to  the  bankers.  The  bill  was  vetoed,  and  did 
not  become  a  law.  In  discussing  the  measure  the  present  Secre- 
tary of  the  Treasury,  Mr.  Carlisle,  then  a  distinguished  member 
of  this  body,  dwelt  upon  the  danger  of  conferring  the  power  upon 
the  banks,  which  the  present  bill  confers,  of  contracting  and  ex- 
panding the  currency,  and  used  this  language: 

But,  Mr.  Speaker,  by  far  the  most  dangerous  feature  yet  introduced  into 
the  national  Danking  system  is  contained  in  that  part  of  the  fourth  section  of 
1728 


the  act  of  June  20, 1874,  which  authorizes  the  banks  at  any  time,  and  for  any 
reason  which  they  may  choose  to  consider  sufficient,  to  deposit  lawfiil  money 
witli  the  Treasurer,  contract  the  currency  to  that  extent,  and  withdraw 
their  bonds;  and,  sir,  it  is  not  going  too  far  to  say  that  until  this  feature  is 
wholly  eliminated  or  materially  modified  there  can  be  no  assurance  of  safety 
to  any  legitimate  investment  or  business  enterprise  in  this  country.  If  there 
was  ever  a  doubt  as  to  the  dangerous  character  of  the  power  which  this  part 
of  the  law  gives  to  the  banks  over  the  business  and  property  of  the  i)eople, 
the  arbitrary  and  unjustifiable  proceedings  of  the  last  week  ought  to  dispel 
it  forever.  The  power  was  conferred  in  the  first  instance,  as  I  have  said,  for 
a  special  and  temporary  purpose,  the  equalization  of  the  national-bank  cir- 
ciilation,  but  when  the  resumption  act  of  January  14, 1875,  was  passed,  which 
removed  all  restrictions  as  to  the  amount  of  such  currency  and  made  the  sys- 
tem entirely  free,  there  was  no  longer  any  necessity  for  this  clause,  and  it 
should  have  been  instantly  repealed.  It  is  a  standing  menace  against  the 
prosperity  of  the  country.  Armed  with  this  destructive  weapon  the  banks 
may  at  any  time,  without  a  moment's  notice  or  a  shadow  of  provocation, 
sti-ike  down  every  industry  and  every  commercial  enterprise  of  the  people. 

The  banks,  or  some  of  them  at  least,  first  began  to  pervert  this  section  of 
the  statute  from  its  original  purpose  and  abuse  the  power  which  it  conferred 
upon  them,  by  depositing  lawful  money  and  withdrawing  their  bonds  from 
time  to  time,  in  order  to  speculate  upon  them  in  the  market.  They  thus 
withdrew  lai'ge  amounts  of  their  circulation  and  contracted  the  currency, 
not  because  the  reduced  demands  of  business  made  the  outstanding  volume 
of  circulation  unnecessary  or  unprofitable,  but  simply  because  they  wanted 
to  realize  the  high  premiums  on  their  bonds  and  speculate  in  the  securities 
upon  which  the  Government  had  already  delivered  to  them  90  per  cent  in 
notes.  These  notes  would  be  left  outstanding  for  the  time  being,  but  an 
equal  amount  of  Treasury  notes  would,  of  coui'se,  be  withdrawn  from  circu- 
lation and  held  at  the  Department  to  redeem  the  bank  notes  as  they  might 
come  in.  The  Treasurer,  in  his  last  annual  report,  describes  this  process  by 
reference  to  actual  transactions  in  liis  office;  and  as  his  statement  on  this  sub- 
ject can  not  be  conden.sed  without  impairing  its  force,  I  give  it  in  his  own 
words.    He  says: 

"  Under  the  construction  placed  upon  the  law  banks  which  have  thus  reduced 
their  circulation  have  lieen  permitted  to  increase  it  again  as  often  and  as 
largely  as  they  chose,  whether  their  legal-tender  deposits  were  exhausted  or 
not.  An  example  will  better  illustrate  these  operations.  In  January  and  Feb- 
ruary, 1875,  a  certain  bank  reduced  its  circulation  from  $308,490  to  $45,000  by 
deposits  of  legal-tender  notes.  Between  September  26, 1876,  and  May  26, 1877, 
and  before  that  deposit  was  exhausted,  it  increased  its  circulation  to  $450,000. 
Between  August  14  and  September  10,  1877,  it  again  reduced  its  circulation  to 
$45,000.  On  September  19, 1877,  nine  days  after  completing  the  deposits  for 
this  reduction,  it  again  began  to  take  out  additional  circulation,  although 
$402,.5.50  of  prior  deposits  remained  in  the  Treasury,  and  by  the  26th  of  that 
month  its  circulation  had  again  been  increased  to  $450,000.  July  22, 1878,  it,  for 
the  third  time,  reduced  its  circulation  to  $45,000,  and  jn  August  and  Septem- 
ber, 1879,  again  increased  it  to  $450,000,  at  which  it  n<fw  remains,  the  balance 
of  its  former  legal-tender  deposit  then  in  the  Treasury  being  $112,615."  *  *  * 
No  one  will  contend  that  this  was  a  legitimate  and'  proper  method  of  con- 
ducting business  under  the  national  banking  system,  and  yet  it  can  be  resorted 
to  every  day  by  every  bank  in  the  United  States  as  long  as  the  fourth  section 
of  the  act  of  June  20, 1874,  remains  unrepealed.  It  disturbs  values,  aft'octs  the 
money  market,  and  subjects  the  Government  to  unnecessary  expense  merely 
to  gratify  a  spirit  of  speculation  and  gain  on  the  part  of  the  managers  of  the 
bank,  and  it  ought  to  be  peremiitorily  forbidden  in  the  future. 

Under  this  section^the  banks  have  it  in  their  power  to  contract  the  cur- 
rency and  iiroduce  financial  distress,  involving  every  interest  in  the  country 
and  embarrassing  the  operations  of  the  Government  itself,  whenever  they 
may  think  it  will  ])romote  their  special  interests  to  do  so.  If  they  do  not  like 
proposed  legislation  in  Congress  or  elsewhere;  if  they  are  opposed  to  the  suc- 
cess of  a  particular  political  party ;  if  they  conclude  that  they  ought  to  be 
exempt  from  all  taxation.  State  and  Federal;  if  they  want  additional  privi- 
leges conferred  upon  them  in  respect  to  any  matter  connected  with  their 
business;  in  short,  if  their  opinions  and  interests  are  not  consulted  in  all 
cases  whatsoever,  they  can  resort  at  once  to  this  tremendous  power  over  the 
fortunes  of  the  people  and  thus  bring  the  timid  to  terms  and  ruin  all  who  re- 
fuse to  accede  to  their  demands.  A"  plausible  pretext  can  always  be  found 
or  invented  for  the  exercise  of  such  a  power  as  tliis,  and  powerful  influences 
can  always  be  brought  to  justify  and  sustain  it. 

The  two  Houses  of  Congi-ess,  representing  the  aggregate  interests  of  fifty 
millions  of  people,  have,  after  mature  deliberation,  passed  a  bill  which  the  , 
banks  have  chosen  to  consider  obnoxious  to  them,  and  forthwith — within 
thirteen  days — they  have  contracted  the  currency  to  the  extent  of  $18,722,340 
172S 


and  precipitatecl  a  crisis  which  would  have  been  disastrous  to  the  coimtry 
had  it  not  1>eeu  met  by  measures  which  they  had  no  power  to  prevent.  The 
prompt  action  of  the  Secretarv  of  the  Treasury  in  purchasing  a  large  amount 
of  bonds  at  the  city  of  Xcw  "^ork.  and  the  course  of  the  Canadian  banks  in 
throwing  seven  or  eight  nnllii  m  dollars  of  their  loanable  capital  on  the  market, 
alone  prevented  a  catastrophe  fnmi  the  effects  of  which  we  might  not  have 
entirely  recovered  for  many  years.  Wlien  Secretary  McCulloch,  several  years 
since,  in  ]iursuance  of  his  contraction  policy,  began  to  retire  and  cancel  legal- 
tender  notes  at  the  rate  of  S4,(XH),(X)0  per  month,  it  produced  such  consterna- 
tion in  l)usiness  circles  that  Congress  was  forced  to  intervene  at  once  and 
arrest  the  process  by  the  passage  of  a  joint  resolution;  but  now  we  have  seen 
nearly  j;W.<H)(i.(KX)  of  circulation  withdrawn  in  less  than  half  a  month,  not 
by  the  (Tovernment,  but  by  institutii)ns  in  the  management  of  which  the 
Government  has  no  voice,  and  still  gentlemen  here  insist  that  the  power 
under  which  this  has  been  done,  and  under  which  it  may  at  any  time  be 
repeated,  shall  not  be  taken  away.  Why,  sir,  the  whole  contraction  of  legal- 
tender  Treasury  notes  under  the  provisions  of  the  resumption  act,  from 
Januai-y  14,  lcS75,  to  May  ;{1, 1)S78,  when  it  was  prohibited  bylaw,  was  only  $34,- 
31t*,fl84,  not  twice  as  much  in  more  than  three  years  as  the  bank  contraction 
has  been  in  less  than  two  weeks. 

This  experience  warns  us  that  we  can  not  safely  permit  this  great  power  to 
remain  in  the  hands  of  these  institutions  unchecked  by  legal  restrictions.  It 
is  an  engine  of  destruction  standing  in  the  very  narrowest  part  of  the  way  to 
permanent  industrial  and  commercial  prosperity  in  this  coimtry:  for  there 
can  be  no  such  prosperity  anywhere  in  the  midst  of  sudden  and  enormous 
contractions  of  the  currency;  nor  will  prudent  and  experienced  business 
men  embark  in  large  and  expensive  enterprises  when  the  power  to  make 
such  contractions  is  held  by  private  and  interested  parties  who  acknowledge 
no  restraints  except  pubUc  sentiment  and  their  ovra  views  of  the  public  wel- 
fare. By  law  the  volume  of  legal-tender  notes  is  limited  to  $34ti,t5.sl,016,  while 
iinder  the  policy  of  the  Government  nearly  $1.tO,(HI(),0(K1  in  gold  and  silver 
coin  are  permanently  withheld  from  circulation  and  hoarded  in  the  Treas- 
ury. Of  the  1454,000,000  gold  coin  in  the  country  the  Government  and  the 
banks  held,  on  the  1st  day  of  November  last,  $3.54.000,000,  and  the  people 
only  $200,000,000.  The  circulation  of  State  banks  is  taxed  oiit  of  existence; 
the  coinage  of  silver  is  limited  by  statute  to  $4,000,000  per  month;  and  so  it 
appears  tTiat  by  statute  or  public  policy  every  form  or  currency  whicli  the 
peo])le  can  use  in  the  transaction  of  tlaeir  business  is  restricted,  except  na- 
tional-bank notes.  They  alone  are  perfectly  free  from  all  restrictions,  legal 
or  otherwise,  and  upon  them  the  peo])le  are  compelled  to  rely  under  existmg 
circumstances  for  the  additional  facilities  of  exchange  necessary  to  enable 
them  to  carry  on  their  growing  industries  and  conduct  their  rapidly  increas- 
ing commercial  enterprises. 

What  a  fatal  policy  it  is,  in  view  of  these  considerations,  to  retain  on  the 
statute  book  as  part  of  our  currency  system  a  law  which  subjects  all  these 
great  interests  to  the  arbitrary  will  or  mistaken  judgment  of  two  thousand 
corporations. 

Mr.  WARNER.  I  understand  the  gentleman  from  Texas  uses 
the  language  of  Mr.  Carlisle  as  being  the  views  the  gentleman  now 
entertains  himself. 

Mr.  BELL  of  Texas.  I  do;  but  not  simply  for  that  reason.  I 
use  the  quotations  because  they  express  my  views  in  more  forceful 
and  better  language  than  I  can  command,  and  also  for  the  purpose 
of  showing  the  views  entertained  by  one  of  the  leading  statesmen 
of  the  country  at  the  time  they  were  expressed* 

The  quotations  whicli  I  have  just  read  show  that  at  that  time 
Mr.  Carlisle  did  not  think  it  safe  to  intrust  the  banks  with  the 
power  to  expand  and  contract  the  currency  at  will,  and,  I  think, 
show  very  clearly  that  it  would  not  be  safe  to  confer  such  an  au- 
thority upon  them  at  present. 

If,  until  that  power  should  be  wholly  eliminated  or  materially 
modified,  there  could  be  no  assurance  of  safety  to  any  legitimate 
investment  or  business  enterprise  in  this  country  in  1881,  how 
could  there  be  in  1895  with  the  dangerous  power  greatly  increased? 

If  it  was  a  standing  menance  against  the  prosperity  of  the 
country  then,  why  would  it  not  be  so  now? 

1728 


If  they  could  and  did  use  their  dangeroiis  power  over  the  for- 
tunes of  the  people  to  control  legislation,  to  affect  elections,  to 
prociire  favors,  and,  in  short,  to  acconijilish  whatever  they  wanted 
then,  why  could  they  not  and  why  would  they  not  do  so  again? 

If  we  could  not  safely  permit  the  great  power  to  remain  in  their 
hands  unchecked  by  legal  restrictions  then,  how  can  we  safely 
restore  it  to  them  now? 

If  prudent  and  exi^erienced  business  men  would  not  embark  in 
large  and  extensive  enterprises  when  the  power  to  make  extensive 
contractions  in  the  currency  was  held  by  private  and  interested 
parties  twelve  years  ago,  how  coiild  they  be  expected  to  do  so  now? 

Mr.  Chairman,  in  1883,  after  the  banks  for  several  years  had  had 
the  power  to  contract  the  currency  at  will,  the  jiro vision  of  the 
law  which  it  is  now  sought  to  repeal  was  passed.  Let  us  profit  by 
the  misfortune  of  others  and  not  learn  new  lessons  in  the  bitter 
school  of  experience  and  at  the  expense  of  ovir  constituents. 

But,  Mr.  Chairman,  if  this  elastic  currency  which  is  to  expand 
and  contract  automatically,  and  which  though  so  perfect  in  theory 
but  has  always  proven  so  dangerous  and  destructive  in  practice, 
is  to  be  desired,  would  it  be  procured  by  this  bill?  I  think  that  I 
can  show  that  it  would  not. 

The  amount  of  the  notes  and  bills  which  could  be  deposited  to 
secure  circulation  is,  as  stated,  nearly  $500,000,000.  If  they  were 
all  used,  the  bank  notes  which  could  be  issued  on  them  would  be 
$1,666,666,666.  There  are  now  outstanding  $207,000,000  national- 
bank  bills,  and  as  these  and  the  $500,000,000  national  currency 
would  be  withdrawn  from  cir dilation,  the  volume  of  paper  could 
be  increased  $957,000,000.  If  this  should  be  done,  I  grant  that 
the  expansion  of  the  currency  would  be  ample,  but  there  would 
be  no  longer  elasticity,  except  through  contraction,  of  which  I 
think  I  have  shown  the  evil  effects.  But  it  must  be  remembered 
that  those  who  have  money  to  loan  are  interested  in  getting  a 
good  rate  of  interest  for  it.  Most  of  the  bankers  who  testified 
before  the  Committee  on  Banking  and  Currency  gave  it  as  their 
opinion  that  there  was  a  plethora  of  currency  now.  They  stated 
that  they  could  not  find  borrowers  for  the  enormous  accumula- 
tions of  idle  money.  It  would  be  to  the  interest  of  those  who  have 
money  to  loan  to  decrease  rather  than  increase  the  volume  of  our 
circulation.  Let  us  see  if  that  could  not  be  done  under  the  pro- 
posed law  without  costing  the  banks  anything. 

The  report  of  the  Comptroller  of  the  Currency  shows  that  on 
the  18th  day  of  Jiily  of  last  year  the  national  banks  alone  had  on 
hand,  in  actual  money,  $459,633,933,  of  which  $188,361,318  was  in 
legal-tender  notes.  Banks  are  required  by  law,  and  if  they  were 
not  by  law  they  woiild  be  by  necessity,  to  keep  on  hand  a  consid- 
erable portion  of  their  deposits.  Legal  tenders  could  'be  and  are 
held  in  the  reserves.  It  would  be  possible,  therefore,  for  a  part  of 
the  banks,  by  acquiring  the  legal  tenders,  to  obtain  exclusive  power 
to  issue  the  currency  under  the  proposed  law  without  it  costing 
them  anything.  They  would  obtain  a  valuable  monopoly  without 
expense  to  themselves.  Of  course  the  banks  could  do  the  same 
thing  now  by  buying  aU  the  outstanding  bonds,  but  they  would 
gain  nothing  by  it,  for,  under  the  limitations  imposed  by  our  laws, 
the  banks  can  i\pt  now  issue  money  at  sufficient  profit  to  justify 
them  in  incurring  the  expense  necessary  to  acquire  the  monopoly. 
1738 2 


10 

But  it  would  be  very  different  when  the  exclusive  privilege  of  is- 
suing the  money  could  be  acquired  \vithout  cost.  At  one  time 
this  might  have  been  a  preposterous  supposition,  but  in  this  age 
of  combines,  trusts,  and  syndicates  it  would  not  be  so  imreasonable 
an  undertaking  as  many  which  have  been  carried  to  a  successful 
termination. 

So  far  as  the  increase  of  the  volume  of  currency  is  desirable,  the 
national  banks  have  ample  power  under  existing  laws  to  accom- 
plish it.  The  troiible  is  they  \\'ill  not  exercise  their  power.  They 
are  guarding,  as  they  should,  their  own  interests  and  the  inter- 
ests of  those  they  serve,  and  not  looking  after  the  welfare  of  the 
country,  and  it  would  be  absurd  for  us  to  expect  and  unreason- 
able for  us  to  desire  them  to  do  so.  It  is  more  beneficial  to  the 
banks  to  be  able  to  loan  $100  at  10  per  cent  than  to  loan  $200  at  4 
per  cent. 

Mr.  TERRY.  Let  me  ask  the  gentleman  from  Texas  right 
there  if  it  is  not  a  fact  that  while  we  were  shaking  with  the  panic 
of  1893  the  banks  had  largely  decreased  their  circulation? 

Mr.  BELL  of  Texas.  That  is  a  fact.  I  have  the  figures  at  hand 
showing  what  the  decrease  was,  and  intended  to  call  attention  to 
them  in  the  course  of  my  remarks.  Perhaps  I  can  do  so  as  well 
now  as  any  time.  In  1883  the  outstanding  circulation  of  the 
national  banks  amounted  to  $362,651,169.  On  Jime  1, 1893,  it  had 
been  reduced  to  $178,377,067.  It  is  impossible  to  tell  to  what 
extent  the  contraction  of  the  bank  circulation  in  the  ten  years 
preceding  the  panic  had  conti-ibuted  to  bringing  it  on,  but  that  it 
had  something  to  do  with  our  misfortunes  I  do  not  think  c;in  be 
doubted.  However,  as  I  was  saying,  I  do  not  think  it  right  or 
exi)edient  to  have  the  volume  of  money  with  which  the  American 
people  shall  ti-ansact  their  business  determined  by  those  whose 
judgments  might  be  warped  by  considerations  other  than  the 
public  welfare. 

Mr.  Chairman,  I  do  not  believe  in  this  modern  fad  of  elastic  cur- 
rency, anyway.  It  has  been  tried  in  other  times  in  this  country 
and  elsewhere,  and,  -wath  rare  exceptions,  has  proved  disastrous 
and  been  condemned.  I  believe  we  ought  to  have  an  expanding 
currency;  one  the  volume  of  which  will  keep  pace  with  the  growth 
of  our  population  and  the  development  of  our  business.  If  our 
population  should  d^vindle  and  our  business  permanently  decline, 
it  might  become  necessary  to  rediice  our  circulation,  but  tliat  is 
hardly  a  supposable  possibility.  If  during  a  period  of  temporary 
depression  there  should  be  a  little  more  currency  than  the  holders 
of  it  can  find  a  satisfactory  use  for,  it  is  better  that  they  should 
keep  it  awhile  without  profit  than  that  the  return  of  jn-osperity 
should  be  delayed  by  what  might  be  a  mistaken  judgment  as  to 
the  amount  of  money  needed  by  the  business  world. 

But,  as  I  have  said,  the  banks  can  increase  their  circulation 
under  the  present  law  as  much  as  they  desire.  In  the  three  months 
of  July  and  August  and  September  of  last  year,  the  banks  ap- 
plied for  $42,862,400  increase  in  their  notes,  but  before  the  bills 
could  be  printed  the  demand  had  subsided,  and  consequently 
$11,903,220  of  the  notes  obtained  was  not  used.  The  trouble  then 
was.  not  that  the  law  did  not  enable  the  banks  to  expand  their 
currency  with  sufficient  ra|)idity,  but  that  the  Bureau  of  Engrav- 
ing could  not  do  the  work  fast  enough.  This  difficulty  could  be 
1728 


11 

obviated  by  requiring  a  certain  quantity  of  notes  to  be  kept  on 
hand  for  emergencies,  as  it  is  provided  in  the  proposed  bill  shall 
be  done. 

Of  course,  the  reason  the  banks  do  not  take  out  more  circulation 
is  because  they  can  not  make  money  in  doing  so,  and  the  only  rea- 
son they  take  out  any  is  because  they  are  compelled  to.  As  a 
matter  of  fact,  there  has  not  been  of  late  years  any  profit  to  banks 
in  issuing  currency.  Owing  to  the  premium  the  United  States 
bonds  have  commanded,  the  issuance  of  currency  by  the  banks 
has  resulted  in  a  loss  to  them,  as  can  be  shown  by  a  simple  calcii- 
lation.  I  will  illustrate  with  a  bank  issuing  notes  to  the  amount 
of  $90,000.  If  the  bonds  could  be  had  at  par,  the  amount  invested 
by  the  bank  would  be  $100,000.  On  depositing  the  $100,000  of 
bonds  the  bank  woiild  be  aiithorized  to  issue  $90,000  of  bank  bills; 
but  as  under  the  law  it  would  be  required  to  keep  with  the  Treas- 
urer 5  per  cent  of  that  amount  as  a  redemption  fund,  it  would  only 
have  the  use  of  $85,500  of  its  investment.  Hence,  the  amount  ac- 
tually expended  would  be  $14,500,  while  the  bank  would  be  draw- 
ing interest  on  the  entire  $100,000. 

In  other  words,  siipposing  the  bonds  to  be  drawing  interest  at  the 
rate  of  4  per  cent  per  annum,  the  bank  would  receive  $4,000  inter- 
est per  annum  on  an  investment  of  $14,500. 

But  there  are  certain  annual  expenses  which  are  charges  against 
the  circulation.     They  are: 

Tax  of  1  per  cent  on  circulation $900.00 

Cost  of  redemption  of  notes - 45.  (X)- 

Express  charges - 3.00 

Cost  of  plates  for  circulation. -       7.50 

Agent's  fees _ 7.50 

Total --  51963.00 

After  deducting  these  charges  from  the  interest  received  the  net 
income  from  the  investment  of  $14,500  would  be  $3,038,  or  at  the 
rate  of  20  per  cent  per  annum. 

Since,  however,  the  bonds  command  a  premium,  several  differ- 
ent items  will  have  to  be  considered,  for  the  amount  invested 
would  be  greater,  and  when  the  period  for  their  payment  arrived 
the  premium  on  the  bonds  will  be  lost.  Hence,  to  determine  the 
profit  or  loss  on  the  circulation  issued  by  a  bank,  an  allowance 
must  be  made  for  a  certain  amount  to  be  set  aside  each  year  as  a 
sinking  fund  to  offset  the  loss  from  the  depreciation  of  the  value 
of  the  bonds. 

If  currency  had  been  issued  on  the  1st  day  of  October,  1894,  on 
the  4  per  cent  bonds  which  mature  in  1907,  assuming  the  use  of 
the  money  invested  in  the  bonds  to  be  worth  6  per  cent  per  annum, 
there  would  be  neither  profit  nor  loss  on  the  transaction  if  the 
bonds  were  bought  at  a  premium  of  19.13675  cents  on  the  dollar, 
as  is  shown  by  the  following  calculation: 

Amount  invested  in  bonds §119,136. 75 

Ajnoaint  of  circulation,  90  per  cent  on  the  par  value  of  the  bonds, 
less  5  per  cent  redemption  fund  deposited  with  the  Treasurer. .  _      85, 5lX).  00 

Actual  investment 33,  S36. 75 

The  interest  on  which,  at  6  per  cent  per  annum,  would  be --       2,018.20 

The  bank  would  receive  interest  on  the  $100,000 4,  (KM).  00 

Gain  to  bank. 1,981.80 

1738 


The  annual  expense  incident  to  the  issuance  of  the  currency 
wonkl  be — 

Tax  of  1  per  centon  circulation $900.00 

Cost  of  redemption 45.50 

Express  charges 3.00 

Cost  of  plates  for  circulation 7.50 

Afji'iifs  fees -• 7.50 

Sinking  fund  which  it  would  be  necessary  to  set  aside  annually  to  re- 
imburse the  bank  for  the  premium  paid  on  the  bonds 1,019.30 

Making  the  total  annual  expense  incident  to  the  issuance  of  the 
currency -- 1,981.80 

And  leaving  a  net  profit  on  the  issuance  of  the  currency  of 
$1 .981 .80.  which  is  the  same  as  the  interest  on  $33,636.75,  the  amount 
actually  invested  by  the  bank. 

It  vnll  be  perceived  that  at  the  premium  commanded  by  the 
bonds  at  present  there  is  no  inducement  to  the  banks  to  issue  their 
notes,  though  there  would  be  but  little  loss  on  the  transaction  if 
the  use  of  their  money  was  worth  only  6  per  cent.  But  in  many, 
and  perhaps  in  most,  parts  of  our  country  money  readily  com- 
mands 8  per  cent  interest,  and  it  is,  therefore,  manifest  that  in 
those  sections  the  requirement  that  the  banks  shall  invest  a  certain 
amotmt  of  their  capital  in  bonds  with  the  privilege  of  issuing  cur- 
rency, instead  of  being  a  benefit,  is  a  positive  injury.  A  careful 
estimate,  which  was  made  for  me  by  the  Actuary  of  the  Treasury 
Department,  shows  that,  not  allowing  anything  for  the  loss  of  the 
use  of  the  money  from  the  time  of  the  investment  in  the  bonds 
until  the  currency  is  received,  nor  for  the  services  of  the  officers 
*and  employees  of  the  bank  in  issiiing  it,  or  other  incidental  ex- 
penses, and  assuming  the  use  of  the  money  invested  to  be  worth  8 
per  cent  per  annum,  the  loss  to  a  bank  issuing  §!)(), 000  in  notes 
would  be,  at  the  price  the  bonds  now  comjnand,  §52.64  per  annum. 
I  have  never  been  able  to  imagine  why  our  lawmakers  imposed 
this  loss  upon  the  banks.  If  it  was  any  benefit  to  the  Government 
I  could  understand  it:  but  since  we  are  no  longer  interested  in 
keeping  the  price  of  our  bonds  above  par,  and  have  not  been  for  a 
great  many  years,  I  can  not  conceive  upon  what  line  of  reasoning 
those  who  have  legislated  upon  this  matter  have  acted.  The  bur- 
den falls  eventually  upon  the  consumer,  as  all  expenses  necessarily 
do.  If  the  banks  are  compelled  to  sustain  a  loss,  of  course  they 
will  charge  their  customers  enough  more  for  the  use  of  their  money 
to  make  good  their  losses. 

I  have  had  a  calculation  made  of  the  amount  of  interest  paid  on 
the  bonds  deposited  to  secure  the  national-bank  circulation  and 
find  that  up  to  the  beginning  of  the  present  fiscal  year  it  amounted 
to  $419,887,111.75.  As  the  bank  circulation  was  only  90  per  cent 
of  the  value  of  the  bonds  used  to  guarantee  its  redemption,  by 
deducting  10  per  cent  from  the  total  interest  paid  we  obtain  the 
amount  the  Government  could  have  saved  by  issuing  her  ovsm  cur- 
rency to  the  limit  of  the  bank  circulation.  It  wotild  have  been 
$377,898,400.58.  During  this  time  the  tax  on  circulation  paid  by 
the  national  banks  was  $73,G05,011.55,  leaving  the  net  amoimt 
which  the  Government  had  paid  to  its  agents  to  do  what  it  could 
have  done  better  itself  $304,293,389,  a  sum  more  than  sufficient  to 
have  extinguished  all  our  national  obligations  if  it  had  been 
applied  to  that  purpose  and  the  interest  on  the  debt  stopped  when 
each  payment  was  made. 

1728 


13 

If  the  circulation  of  the  bank  notes  had  assisted  to  maintain  the 
stability  of  our  currency  the  Government  would  have  been  bene- 
fited by  them;  but  the  bank  notes  have  always  been  and  are  re- 
deemable in  legal  tenders.  When  the  legal  tenders  were  at  a  dis- 
count, as  compared  with  gold,  the  bank  notes  were  at  exactly  the 
same  discount.  Since  legal  tenders  have  been  redeemable  in  gold 
the  bank  notes  have  been  equivalent  in  vahie  to  gold.  The  bank 
notes  have  not,  then,  assisted  in  keeping  up  the  value  of  the  national 
currency;  but  to  the  extent  that  they  have  filled  tap  the  channels 
of  trade  and  in  other  ways  taken  the  place  of  legal  tenders,  and 
thereby  decreased  the  demand  for  them,  they  have  increased  the 
burden  upon  the  gold  reserve. 

Whatever  considerations,  therefore,  may  have  justified,  if  any 
could,  those  who  originally  delegated  the  power  to  issue  the  cur- 
rency to  the  agencies  created  for  that  purpose,  I  think  that  sound 
policy  requires  that  we  should  resume  the  right  to  regulate  the 
volume  of  our  circulation,  and  transfer  to  the  nation  the  profit 
derived  from  issuing  it  as  soon  as  it  can  be  done  vnthout  seriously 
disturbing  the  business  interests  of  the  country. 

Mr.  Chairman,  the  next  point  to  which  I  wish  to  call  attention 
and,  as  I  have  already  stated,  it  is  the  distinctive  feature  of  the 
bill,  is  the  proposition  to  retire  the  legal-tender  notes. 

The  reasons  assigned  for  this  movement  are,  first,  that  our  peo- 
ple and  foreigners  are  afraid  of  our  money;  that  they  fear  that  we 
will  not  maintain  the  parity  between  all  our  other  money  and 
gold;  that  this  fear  produced  the  ijanic  and  causes  the  continued 
depression,  and  that  the  only  way  to  restore  confidence  is  to  with- 
draw from  circulation  the  notes  which  are  demand-gold  obliga- 
tions; and,  second,  that  it  will  stop  the  drain  on  the  gold  reserve. 

We  were  told  during  the  extra  session  of  Congress  that  our 
troubles  were  occasioned  by  our  enormous  piirchases  of  silver  and 
that  if  we  would  r^^peal  the  purchase  clause  of  the  Sherman  Act 
all  would  be  well.  That  was  done,  but  confidence  was  not  re- 
stored. We  are  now  told  to  retire  the  legal  tenders  and  that  con- 
fidence in  our  money  will  then  be  complete  and  i^erfect. 

Mr.  Chairman,  there  is  not  now,  and  never  was,  any  lack  of  con- 
fidence in  our  money.  No  man  during  the  most  exciting  days  of 
the  panic  declined  either  our  bank  bills,  our  national  currency, 
our  silver  certificates,  or  our  silver  coin.  The  panic  came,  and 
those  who  desired  to  have  our  monetary  affairs  conducted  on  dif- 
ferent lines  took  advantage  of  the  opportunity  to  advance  a  step 
in  the  direction  they  wanted  to  go.  The  depression  continues  and 
they  are  endeavoring  to  advance  another  step,  and  at  least  one 
gentleman  who  testified  before  the  Committee  on  Banking  and 
Ctirrency  candidly  stated  that  after  we  have  retired  the  legal  ten- 
ders then  we  will  have  to  get  rid  of  our  silver,  except  to  the  extent 
that  it  is  needed  for  subsidiary  coin. 

This  brings  up  the  question  as  to  what  prodiTced  our  financial 
disturbances  and  what  occasions  the  continued  stagnation  in 
business. 

I  concede  that  if  the  outstanding  legal  tenders  are  responsible 
for  the  conditions  which  have  prevailed  in  this  country  for  the 
last  four  years  they  ought  to  be  funded  and  retired  regardless  of 
expense. 

But.  on  the  other  hand,  if  it  can  be  shown  that  they  have  been 
172 -i 


14 

and  lire  serving  a  most  useful  purpose;  that  they  have  saved  us 
millions  of  dollars  of  interest;  have  assisted  us  to  iirosecute  the 
enonuons  enterjn'ises  which  we  have  successfully  undertaken;  in 
short,  th;'.t  they  have  not  only  not  brought  on  our  troubles,  but 
have  contributed  greatly  to  our  success  in  times  of  prosi)erity,  and 
by  enabling  us  to  withstand  the  enormous  demands  which  have 
been  made  upon  us  by  foreign  and  domestic  creditors  in  times  of 
adversity,  have  saved  us  from  the  calamities  of  a  complete  collapse 
in  our  financial  affairs,  then  we  ought  to  preserve  them  in  their 
excellence  and  continue  them  in  their  beneficent  work. 

Let  us,  then,  see  if  we  can  discover  the  real  source  of  the  ills 
with  which  we  have  been  and  are  afflicted. 

Periods  of  depression  visit  civilized  countries  about  every  ten 
years.  They  come  with  such  regularity  that  they  must  result 
from  some  ascertainable  cause.  The  cause  is  that  we  are  nearly 
all  prone  to  live  beyond  our  incomes.  In  times  of  financial  ease 
nearly  everybody  becomes  overconfident  and  invests  to  a  greater 
extent  than  his  capital  .iustifies.  As  long  as  credit  lasts  we  appear 
prosperous,  but  when  the  limit  is  reached  and  we  have  to  pay  up, 
our  expenditures  are  curtailed,  our  purchases  are  lessened,  prices 
decline,  and  business  stagnates,  until  the  liquidating  process  is 
complete.  Confidence  is  then  again  restored,  speculation  becomes 
rife,  overinvestment  is  the  order  of  the  day,  and  the  same  process  is 
repeated. 

It  is  with  the  aggregation  of  people  who  constitute  the  civilized 
world  as  it  is  with  a  single  indi\adual.  If  one  of  us  has  been  living 
beyond  our  means  the  time  comes  when  he  is  compelled  to  curtail 
his  expenditui'es  until  he  can  recuperate  and  liquidate  his  indebt- 
edness.    It  is  the  same  way  with  the  world  at  large. 

For  several  years  prior  to  the  fall  of  1890  the  whole  ci\'ilized 
world  was  enjoying  what  appeared  to  be  an  unexampled  degi-ee  of 
prosperity.  Money  could  be  obtained  in  almost  unlimited  quan- 
tities for  all  purx^oses,  regardless  of  the  prospects  of  its  being 
rei)aid.  In  our  country  this  caused  an  unwarranted  degree  of 
inflation.  Fields  which  should  have  remained  in  the  possession 
of  the  husbandman  were  divided  into  town  lots;  industrial  enter- 
prises of  all  kinds  were  capitalized  for  many  times  their  cost  and 
at  figures  at  which  it  was  impossible  that  a  reasonable  return  for 
the  money  invested  could  be  realized.  Speculation  of  all  kinds 
was  rife  in  the  land,  and  the  man  was  not  only  wise  but  extremely 
fortunate  who  avoided  being  drawn  into  the  devastating  whirl- 
pool. 

If  these  enterprises,  wild  and  senseless  as  many  of  them  were, 
had  been  conducted  on  home  capital,  the  result  would  not  have 
been  so  disastrous  when  the  bubble  burst,  for  it  would  only  have 
eventuated  a  change  of  the  ownership  of  that  capital.  But  much, 
if  not  most,  of  the  means  on  which  these  undertakings  were  con- 
ducted had  been  directly  and  indirectly  borrowed  from  the  money 
centers  of  Europe.  As  long  as  the  princip;il  was  not  called  in,  and 
as  long  as  the  speculators  could  l)orrow  money  with  which  to  pay 
interest  on  the  ijrincipal,  all  went  as  merry  as  a  marriage  bell;  and 
it  seemed  as  if  man  had  at  last  solved  the  problem  of  making  a 
dollar  without  earning  it. 

History  repeats  itself,  and.  as  all  previous  periods  of  abnormal 
inflation  have  been  followed  by  a  corresponding  period  of  liqui- 
1728 


15 

dation  and  depression,  so  must  the  one  I  have  been  describing. 
However,  bad  as  was  the  overinvestment  of  borrowed  capital  in 
unproductive  enterprises  in  our  country,  still  it  may  be  that  we 
would  have  safely  passed  the  crisis  if  the  same  misfortune  had  not 
overtaken  others  upon  whom  we  were  compelled  to  rely  for  as- 
sistance. Unfortunately,  the  people  of  all  the  other  civilized  na- 
tions of  the  earth  had  been  and  were  recklessly  treading  the  same 
paths,  utterly  oblivious  of  the  fact  that  the  day  of  reckoning  and 
settlement  was  near  at  hand. 

In  staid  and  sober  England,  where  they  had  no  inflated  currency 
to  act  as  an  unhealthv  stimulant,  the  corporate  capital  brou.ght 
into  existence  in  1889  was  £189.000,000,  as  against  £98,000,000  in 
1887.  The  French  had  put  millions  into  the  Panama  Canal  and 
similar  schemes  on  which  no  returns  could  be  realized.  The  Ger- 
mans were  straining  every  nerve  to  maintain  their  immense  army 
which  yielded  no  revenue  in  return. 

Just  at  this  time,  while  credit  was  expanded  far  beyond  the 
danger  limit,  and  when  the  people  of  the  United  States  were  in- 
debted to  Europeans  in  an  amount  variously  estimated  at  from 
two  to  six  billion  dollars,  the  failures  in  the  Argentines  occurred, 
and  those  who  had  loaned  money  in  that  Republic  were  unable  to 
call  in  their  principal  or  interest.  This  caused  lenders  to  lose  confi- 
dence in  the  security  of  their  loans  elsewhere,  and  also  compelled 
many  who  could  live  on  their  interest  when  it  was  paid  to  call  for 
the  principal  of  the  loans  which  they  had  made  to  others. 

The  old  and  well-established  banking  house  of  Baring  Brothers, 
which  was  supposed  to  be  one  of  the  most  reliable  and  safe  insti- 
tutions in  existence,  was  closed.  The  Bank  of  England  appeared 
to  be  on  the  verge  of  bankruptcy.  Consternation  and  fright  took 
possession  of  financiers  and  business  men.  Deposits  were  with- 
drawn; uncertainty  prevailed;  debts  must  be  collected,  securities 
must  be  realized  upon,  or  disaster  would  become  universal. 

It  was  tmder  these  circumstances  that  the  eyes  of  the  people  of 
Europe  were  turned  upon  the  young  Republic.  Our  creditors  de- 
manded payment  of  theii'  debts,  and  such  are  the  wonderful  re- 
sources of  our  country  and  such  the  wonderful  recuperative  ener- 
gies of  our  people  that  we  met  their  demands  with  a  promptness 
which  challenged  the  admiration  and  excited  the  envy  of  the 
world.  The  process  of  paying  our  debts  and  absorbing  our  securi- 
ties, which  is  the  principal  means  of  paying  them,  has  been  con- 
tinued and  still  continues. 

But  just  as  the  financial  skies  were  clearing  and  the  dawning  of 
a  better  day  could  be  seen  on  the  business  horizon  came  the  dis- 
astrous failures  in  Australia,  where,  in  six  weeks,  banks  whose 
capital  exceeded  the  aggregate  capital  of  all  the  banks  in  our  great 
metropolis  were  compelled  to  suspend,  and  there  was  a  complete 
collapse  in  all  business  enterprises.  This  would  not  have  affected 
us  perceptibly  if  it  had  not  been  that  Australia  had  borrowed 
money  in  the  markets  where  we  still  owed  so  much.  The  holderg 
of  our  securities,  who  were  also  creditors  of  Australia,  were  com- 
pelled to  sell  whatever  they  could  realize  upon,  and  the  return  of 
our  securities  continued  with  accelerated  speed  and  so  rapidly 
that  we  could  not  absorb  them  in  a  healthy  manner. 

With  securities,  as  with  everything  else,  when  the  supply  ex- 
ceeds the  demand  prices  depreciate,  and  hence  there  was  a  great 

K28 


16 

shrinkage  in  values.  This  caused  some  to  market  their  holdings, 
and  coiui)elled  others  to  do  so.  Overcapitalized  enterprises  were 
unable  to  pay  interest  on  their  mortgages  and  stocks.  The  appoint- 
ment of  receivers  and  the  execution  of  assignments  were  the  order 
of  the  day.  Depositors  withdrew  their  deposits.  Insolvent  con- 
cerns failed;  many  solvent  ones  became  embarrassed  and  were 
compelled  to  suspend.  Creditors  lost  confidence,  not  in  the  value 
of  the  money  in  which  they  would  be  paid,  but  in  the  ability  of 
their  debtors  to  pay  in  any  kind  of  money.  The  acute  stage  of 
the  panic  passed;  confidence  revived;  the  deposits  were  returned 
to  the  banks  which  had  weathered  the  storm,  and  the  liquidation, 
which  was  far  from  complete,  progi-essed,  and  still  progresses,  in 
a  more  orderly  manner. 

When  it  will  be  ended  no  one  can  tell,  but  until  it  is  there  can 
be  no  return  of  general  and  substantially  universal  prosperity. 
When  it  is  over,  unless  for  once  history  fails  to  repeat  itself,  cap- 
ital will  come  forth;  new  enterprises  will  be  inaugurated;  chi- 
merical undertakings  'nill  flourish;  labor  ^^'ill  be  in  demand;  wages 
will  increase;  purchases  ^\'ill  double;  prices  wall  advance;  pros- 
pei-ity  will  be  unbounded  and  appear  to  be  permanent;  the  few 
^vill  "remain  cool,  cautious  and  conservative;  the  many  \vi\\  be 
bold,  aspiring,  and  adventurous;  the  day  of  reckoning  will  roll 
roimd;  the  bubble  will  burst;  the  liquidation  will  begin;  the  proc- 
ess through  which  we  are  now  passing  will  be  repeated,  and  it 
will  continue  to  be  repeated  until  the  Author  of  our  being  creates 
a  new  generation,  and  plants  in  their  breasts  difl'erent  passions, 
impulses,  aims  and  ambitions  from  those  which  now  animate  the 
children  of  men. 

Mr.  Chairman,  the  exjjlanation  which  I  have  given  I  believe  to 
be  the  correct  explanation  of  our  recent  and  present  troubles.  I 
believe  tliat  to  a  large  extent  the  causes  of  our  disasters,  which  I 
have  attempted  to  depict,  are  independent  of,  though  I  have  no 
doubt  that  they  have  l)een  greatly  aggravated  by,  legislation.  I 
feel  confident  that  the  hothouse  process  of  fostering  nonself-sus- 
taining  enterprises  by  a  protective  tariff,  which  has  diverted  the 
energies  of  our  people  into  unnatural  clianiiels,  and  by  compelling 
that  portion  of  them  who  were  engaged  in  what  would  have  been, 
under  normal  conditions,  profitable  employments  to  sustain  in- 
diistries  that  could  not  maintain  themselves,  has  occasioned  many 
of  the  investments  which  have  proven  to  be  unremunerative.  I 
know  that  the  insufficient  volume  of  the  standard  money  with 
which  to  transact  the  business  of  citizens  of  different  countries  and 
to  settle  international  financial  balances  resulting  from  the  de- 
monetization of  silver  has  rendered  the  process  of  liquidation 
infinitely  more  difficult  and  costly;  but  I  repeat,  in  my  judgment 
the  real  cause  of  our  ills  is  to  be  found  in  the  overspeculation,  not 
in  this  country  alone,  but  throughout  the  world. 

However,  it  may  be  said,  and  it  is  claimed  bj'  some,  that  this 
overspeculation  which  has  proven  so  disastrous  is  produced  in 
our  coimtry  at  least  by  our  excessive  issue  of  currency.  It  could 
be  readily  shown  that  we  have  no  unhealthy  suri)lus  of  currency, 
but  an  equally  satisfactory  answer  to  this  suggestion  is  found  in 
the  comparison  of  our  monetary  system  with  those  of  people  who 
were  even  more  reckless  in  their  investments  than  we  were. 

In  Australia  they  were  upon  a  gold  basis  and  had  a  circulation 
1728 


17 

of  $25  per  capita  of  gold  and  of  $1.75  per  capita  of  silver,  and  no 
uncovered  paper,  and  yet  the  kiting  operations,  as  they  are  called, 
were  much  more  extensive  there  than  perhaps  anywhere  else. 

I  think  the  facts  which  I  have  recited  clearly  demonstrate  that 
our  monetary  legislation  did  not  contribute  to  the  conditions 
which  have  prevailed  in  this  country  for  the  past  four  years. 
They  show  that  no  one  doiihted  our  money  whether  it  was  of 
paper  or  of  coin.  If  the  fear  that  we  were  about  to  go  to  a  silver 
basis,  which  those  who  have  exercised  such  a  controlling  influence 
in  our  councils  sought  so  assiduously  to  excite,  had  prevailed,  at 
least  some  of  the  timid  who  were  hoarding  their  money  would 
have  converted  their  currency  into  gold,  and  yet  in  the  three 
months  during  which  the  panic  was  at  its  worst  stage,  from  June 
10  to  September  10,  the  gold  in  the  Treasury  increased  from 
$90,722,958  to  $98,050,470. 

And,  after  all,  what  reason,  which  is  not  incident  to  all  human 
transactions,  is  there  to  siippose  that  all  our  circulation  will  not 
be  kept  on  an  exact  equality?  By  every  consideration  of  interest 
and  honor,  by  the  most  solemn  declaration  of  law,  we  stand 
pledged  to  maintain  the  parity  of  our  money.  No  one  has  a  right 
to  and  no  one  does  question  our  intention  to  keep  unsullied  our 
plighted  faith.  And  from  what  cause  that  does  not  apply  to  all 
currency  not  based  on  an  actual  deposit  of  coin  can  our  abil- 
ity to  redeem  our  notes  on  demand  be  doubted?  Unquestionably 
such  a  contingency  might  arise.  If  confidence  should  be  shaken 
and  holders  of  large  quantities  of  our  currency  should  demand 
its  payment  in  coin,  we  might  have  to  suspend  specie  payments, 
but  as  soon  as  we  coiild  collect  sufficient  surplus  revenue,  or 
replenish  our  reserve  by  the  sale  of  bonds,  we  could  resume  the 
redemption  of  our  notes  in  coin. 

The  same  thing  applies  to  a  bank.  If  it  possessed  resources  to 
the  amount  of  ten  times  its  liabilities,  still  it  might  not  be  able  to 
realize  on  its  securities  with  sufficient  promptness  to  enable  it  to 
meet  its  obligations,  and  hence  it  might  be  compelled  to  suspend 
specie  payments;  but  as  soon  as  it  could  collect  its  debts  or  re- 
plenish its  reserve  by  the  sale  of  securities  it  could  resume  the 
redemption  of  its  bills  in  coin. 

The  cases  I  have  supposed  have  actually  occurred.  During  a 
temporary  embarrassment  our  nation  was  unable  to  maintain  her 
currency  on  a  par  with  coin,  but  as  soon  as  she  could  gather  her 
resources,  and  much  sooner  than  a  private  concern  could  have 
done,  she  tendered  to  those  who  held  her  promise  to  pay  the  actual 
coin  in  exchange  for  it,  and  from  that  day  to  this  there  has  not 
been  the  least  difference  between  the  purchasing  power  of  our  cur- 
rency and  of  gold. 

I  suppose  the  Bank  of  England  is  the  strongest  monetary  institu- 
tion in  existence,  and  yet  during  the  Napoleonic  wars  it  suspended 
specie  payments,  and  did  not  resume  them  for  many  years  after 
peace  was  restored,  and  on  several  other  occasions  in  its  history,  I 
think  five,  it  has  for  short  periods  been  unable  to  redeem  its  notes 
on  demand.  During  our  recent  war  nearly  all  of  the  banks  in  this 
country  suspended.  However,  very  few  of  them  were  insolvent, 
and  most  of  them  redeemed  their  issues. 

So  the  principles  of  redemption  are  identical;  but  there  is  this 
difference  in  favor  of  the  issuance  of  circulating  notes  by  the  Gov- 
1728 3 


16 

ernment.  No  reasonable  person  could  imagine  that  the  nation 
might  become  permanently  insolvent,  and  her  notes,  therefore, 
utterly  worthless,  while  banks  are  sometimes  so  completely  wrecked 
that  there  are  no  assets.  Besides,  if  the  Government  should  sus- 
pend specie  payments  her  notes  would  be  receivable  in  settlement 
for  taxes.  Their  value  would  then  be  regulated  bj'  the  supply  of 
and  demand  for  them,  and  would  consequently  vary  greatly. 
StUl,  the  owner  could  sell  them  for  something  if  he  could  not  hold 
them  until  they  won  .  be  redeemed,  while  the  owner  of  the  bank 
notes  might,  and  doubtless  many  times  would,  be  unable  to  get 
much,  if  anything,  for  them. 

Again,  the  fact  that  the  banks  had  circulation  outstanding 
would  decrease  the  confidence  in  them  in  case  of  a  panic.  I  have 
shown  how  during  last  year,  wMle  loss  of  confidence  in  the 
banks  was  almost  complete,  the  people  preferred  to  hoard  cur- 
rency rather  than  coin.  Suppose  that  we  had  had  currency  issued 
by  the  banks  under  the  proposed  plan.  As  soon  as  the  reserve 
fund  had  been  reduced  by  the  niunerous  failures  which  then 
occurred  the  note  holders  would  have  joined  the  depositors  in 
their  mad  and  generally  foolish  rims  on  the  banks,  few  of  which 
would  have  been  able  to  promptly  respond  to  the  increased  de- 
mand upon  them,  though  a  very  large  per  cent  would  probably 
have  been  entirely  solvent. 

But,  it  is  said,  we  ought  not  to  be  furnishing  other  nations  or 
their  citizens  with  gold.  There  is  no  way  in  which  this  can  be 
avoided  as  long  as  we  are  debtors,  except  by  repudiation,  and  it 
would  make  no  difference  whether  the  gold  reserve  is  maintained 
"by  the  Government  or  the  banks.  Our  European  creditors  make 
theii-  obligations  payable  in  the  same  kind  of  money  they  have 
loaned  us  or  invested  here — gold,  and  when  they  call  for  paj-ment 
gold  must  go.  The  only  time  gold  visits  our  shores  is  when  its 
owner  thinks  he  can  use  it  here  to  more  advantage  than  elsewhere. 
The  only  time  it  leaves  us  is  when  its  owner,  wherever  his  home 
may  be,  thinks  he  can  use  it  to  more  advantage  elsewhere  than  he 
can  here. 

From  January  1 ,  1891 ,  to  December  1 ,  1894,  the  balance  of  trade  in 
our  favor  in  all  kinds  of  commodities,  exclusive  of  gold,  amounted 
to  the  enormous  sum  of  $552,060,152.  During  the  same  period  we 
sent  abroad  $1/2,006,723  more  gold  than  we  imported.  It  all  went 
to  pay  our  debts,  or  because  the  owners  thought  it  could  be  used 
to  more  advantage  in  some  other  country,  and  this  would  have  oc- 
curred regardless  of  whether  the  gold  was  obtained  from  the 
Treasury  or  the  banks.  The  flow  of  gold  is  a  matter  entirely  be- 
yond the  control  of  legislation. 

I  hope  this  point  will  be  borne  in  mind  in  connection  with  what 
I  now  have  to  say. 

Mr.  Chairman,  if  our  legal  tenders  are  retired  where  are  we  to 
get  money  of  redemption  to  take  their  place?  No  considerable 
number  of  persons  would  be  willing  to  return  to  the  demoraliza- 
tion of  an  inconvertible  paper.  The  only  possible  method  of 
maintaining  the  convertibility  of  currency  is  to  have  on  hand  a 
sufficient  reserve  of  the  money  in  which  it  is  redeemable  to  meet 
any  ordinary  demand  that  coTild  arise  for  it.     Exactly  what  pro- 

Eortion  the  standard  money  held  as  a  redemption  fund  should 
ear  to  the  representative  money  must  depend  upon  the  particular 
1728 


19 

circumstances  of  eacli  case;  but  it  is  generally  estimated  that  in 
order  to  be  perfectly  safe  it  ought  to  be  something  like  one-third 
of  the  amount  of  the  outstanding  obligations.  At  present  the 
legal  tenders  fully  and  satisfactorily  take  the  place  of  and  serve 
as  gold,  and  consequently  release  Just  that  much  gold  to  perform 
the  functions  of  money  of  ultimate  redemption  and  to  be  used  in 
international  transactions. 

As  I  have  already  stated,  on  the  18th  day  of  July  of  this  year  the 
national  banks  of  the  country  alone  held  as  reserves  $188,261,318  in 
legal-tender  notes.  Doubtless  the  State  and  private  banks  of  the 
country  held  still  more  of  them .  If  these  notes  were  retired ,  where 
is  the  gold  to  take  their  place  to  be  found?  The  silver  which  we 
already  have,  or  its  representative,  is  all  in  active  use  and  serving 
the  same  purpose  as  our  other  legal-tender  money,  and  there  is  no 
prospect,  so  far  as  I  can  see,  of  the  use  as  money  of  any  additional 
silver  soon.  Where,  then,  I  repeat,  is  the  gold  to  come  fi-om?  All 
of  the  nations  of  the  Old  World  have  for  several  years  past  been 
engaged  in  a  scramble  for  gold  with  which  to  replenish  their  ex- 
ciieqiiers.  If  we  should  now  be  added  to  the  number  of  those  who 
are  seeking  to  greatly  increase  their  supply  of  gold,  the  value  of  it 
would  be  enhanced,  and  the  necessary  result  would  be  that  the 
price  of  products  would  be  lowered  still  more.  But,  suppose  we 
get  the  gold  to  take  the  place  of  our  national  currency  from  the  na- 
tions of  the  Old  World,  what  benefit  is  that  to  us?  In  Europe,  as 
elsewhere,  the  price  of  commodities  is  affected  by  the  volume  of 
the  circulating  medium,  and  if  we'  take  from  those  people  their 
money  to  that  extent  we  decrease  their  ability  to  buy  and  thereby 
lower  the  price  of  the  siirplus  products  of  our  industry  which  must 
find  a  market  and  whose  price  is  fixed  in  foreigna  countries. 

I  now  desire  to  submit  some  observations  with  reference  to  the 
remaining  objection  to  our  legal  tenders;  that  is,  that  they  have 
afforded  those  who  desire  to  do  so  a  means  of  depleting  our  Treas- 
ury and  that  they  had  caused  the  issuance  of  bonds  in  times  of 
peace. 

Mr.  Chairman,  I  assert  that  there  has  been  no  drain  to  amount 
to  anything  upon  the  gold  reserve  in  consequence  of  the  legal 
tenders  and  that  the  bond  issue  would  have  been  just  as  necessary 
if  they  had  been  retired  years  ago.  I  intend  to  show  that  the 
whole  cause  of  the  trouble  with  the  gold  reserve  is  that  we  have 
been  compelled  by  our  necessities  to  use,  for  the  purpose  of  de- 
fraying our  ordinary  expenses,  the  money  which  had  been  accu- 
mulated for  and  held  as  a  redemption  fund.  As  this  is  a  point 
about  which,  as  I  think,  there  is  almost  universal  misunderstand- 
ing, I  venture  to  ask  that  those  who  are  polite  enough  to  listen  to 
me  will  give  their  particular  attention  to  the  figures  I  present. 

Mr.  KILGORE.  WUl  my  colleague  before  he  goes  into  that 
allow  me  a  question? 

Mr.  BELL  of  Texas.    Certainly,  with  pleasure. 

Mr.  KILGORE.  I  infer  from  what  you  say  that  if  the  revenues 
of  the  Government  exceed  its  expenditures  there  would  be  no  drain 
upon  the  gold  reserve.  I  would  like  for  you  to  explain  how  that 
could  be  as  long  as  the  holder  of  gold  obligations  can  present  them 
and  have  them  redeemed  in  gold. 

Mr.  BELL  of  Texas.  I  will  try  to  do  so.  I  do  not  claim  that 
there  coiild  not  be  a  drain  upon  the  gold  reserve  under  the  con- 
1728 


20 

ditions  you  name.  I  concede  that  under  certain  circumstances 
there  might  and  would  be  just  such  a  drain  as  I  have  already  ex- 
plained. What  I  say  is,  that  there  could  be  no  permanent  drain, 
and  that  if  there  was  a  temporary  drain  the  reserve  would  right 
itself.  My  contention  is  that  the  volume  of  currency  which  will 
circulate,  whether  issued  by  the  Government  or  the  banks,  is  the 
amount  that  can  be  more  profitably  used  than  can  that  into  which 
it  can  be  converted.  If  our  receipts  exceed  our  exijenditures  there 
will  be  an  accumulation  of  money  in  the  Treasury.  If  there  should 
happen  to  be  an  excess  of  currency  it  will  be  returned  to  or  al- 
lowed to  remain  in  the  Treasury  until  the  volume  of  currency  in 
circulation  is  thereby  reduced  to  the  amount  which  can,  as  I  have 
stated,  be  used  to  a  better  advantage  than  can  the  coin  into  which 
it  could  be  converted.  When  the  equilibrium  between  the  de- 
mand for  and  supply  of  currency  is  thus  restored  there  will  no 
longer  be  a  demand  for  gold,  but  if  our  receipts  continue  to  ex- 
ceed our  expenditures  there  will  be  a  further  accumulation  of 
money  in  the  Treasury.  When  we  pay  our  creditors  they  vriU 
prefer  to  accept  currency.  Money  will  continue  to  accumulate  in 
the  Treasury,  but  it  will  be  in  gold.  This  would  not  be  the  case, 
I  concede,  if  the  people  preferred  to  use  gold  instead  of  currency 
in  their  ordinary  transactions,  but  since,  owing  to  the  inconven- 
ience of  handling  coin,  and  the  loss  resulting  from  abrasion,  they 
would  rather  have  the  currency,  it  will  be  taken,  and  the  gold 
will  be  allowed  to  remain  in  the  Treasury.  That  this  has  been 
the  case  I  think  can  be  clearly  shown. 

On  the  1st  day  of  January,  1879,  specie  payments  were  resumed 
in  this  country.  At  that  time  there  was  in  the  United  States 
Treasury,  in  available  money,  $227,740,294.  As  I  expect  to  talk  a 
good  deal  about  available  money  perhaps  I  had  better  stop  here 
long  enoiigh  to  explain  what  is  meant  by  that  term.  The  avail- 
able money  is  that  which  is  in  the  Treasury,  but  which  is  not  held 
as  a  trust  fund  for  a  specific  pui'pose.  For  instance,  a  person 
who  desires  to  do  so  can  deposit  vdth  the  United  States  Treasurer 
gold  coin  and  receive  for  it  a  gold  certificate  stating  that  there 
has  been  a  deposit  of  the  gold,  which  will  be  paid  on  the  return 
of  the  certificate.  The  Treasurer  holds  this  gold  simply  as  a 
trustee  for  the  owner  of  the  certificate.  The  gold  does  not  be- 
long to  the  Government.  It  is  the  same  with  the  silver  against 
which  certificates  are  outstanding.  There  are  also  certain  agency 
funds  in  the  Treasury,  as,  for  instance,  the  money  which  is  held 
by  the  Treasurer  for  the  purpose  of  redeeming  notes  of  existing 
national  banks,  which  are  not  parts  of  the  available  assets. 

So  then,  as  I  say,  on  the  last  day  of  December,  1878,  there  was 
in  the  United  States  Treasury  a  balance  of  available  assets  to  the 
amount  of  §237,740,294,  of  which  $114,193,360  was  in  gold.  On  the 
30th  day  of  June,  1892,  the  available  cash  in  the  Treasury  had 
been  reduced  to  $126,692,372,  of  which  $114,342,367  was  in  gold. 
Nobody  claims  that  there  was  any  drain  upon  the  gold  between 
the  two  periods  I  have  mentioned.  From  that  time  on  our  receipts 
were  largely  exceeded  by  our  expenditures,  and  consequently  the 
available  assets  in  the  Treasury  were  greatly  reduced,  and  in  nearly 
exactly  the  same  proportion,  though  not  quite  to  the  same  extent, 
that  part  of  the  gold  which  was  a  part  of  the  assets  was  also. 
This  condition  continued  until,  on  the  30th  day  of  December  of 

ir28 


21 

last  year,  the  available  assets  in  the  Treasury  amounted  to  $90,- 
375,555,  of  which  $80,891,600  was  in  gold. 

At  this  time  the  decrease  in  the  gold  had  not  been  quite  so  great 
as  the  decrease  in  the  available  assets  in  which  the  gold  was  in- 
cluded. During  the  next  few  weeks  the  bond  issue  occurred,  and 
then,  for  the  first  time,  there  was  some  evidence  of  a  drain  on  the 
gold  reserve  as  distinguished  from  the  available  assets,  and  the 
gold  reserve  ran  down  to  $65,000,000.  This  was  occasioned  by  the 
demand  for  gold  with  which  to  pay  for  the  bonds.  The  sale  of 
bonds  increased  the  net  balances  in  the  Treasury  by  $58,660,917.63, 
but  the  expenditures  still  continued  to  exceed  the  receipts,  and  so 
the  gold  reserve,  and  also  the  available  assets  of  which  it  was  a 
part,  continued  to  decline,  and  another  issue  of  bonds  took  place 
about  the  middle  of  last  month.  At  that  time  the  gold  reserve  was 
increasing  at  a  rapid  rate,  and  had  grown  from  $52,49H,778  on 
August  10  to  $61,832,259  on  November  17;  but  during  the  same 
period  the  available  money  in  the  Treasury  had  decreased  from 
$117,975,710  to  $101,924,610. 

I  think  that  these  figures  show  that  the  only  drain  vipon  the  gold 
reserve  as  distinguished  from  the  assets  of  which  it  was  a  part 
was  occasioned  by  the  demand  for  gold  with  which  to  buy  the 
bonds. 

As  I  have  stated,  the  bond  issue  was  really  necessary,  not  for 
the  purpose  of  keeping  up  the  gold  reserve,  but  for  the  purpose  of 
paying  our  expenditures,  and  this  would  have  been  the  case  if 
there  had  been  no  legal  tenders.  To  make  this  a  little  plainer  let 
us  suppose  that  at  any  given  time  prior  to  a  certain  date  the 
legal  tenders  had  all  been  funded  and  retired.  Of  course,  the 
$100,000,000  of  gold  which  was  held  for  the  purpose  of  redeeming 
the  greenbacks  and  Treasury  notes  woiild  have  been  used  to  pay 
them  off  to  that  amount.  Suppose  this  had  occurred  some  time 
prior  to  the  20th  day  of  June,  1893.  There  would  then  have  been 
on  hand  of  available  assets  $22,462,290 ;  but  between  June  30 
and  November  10  of  last  year  our  exi^enditures  exceeded  our 
receipts  to  the  amount  of  $22,735,449.  So  that  on  the  day  last 
mentioned  the  Government  would  have  lacked  $273,159  of  having 
money  enough  with  which  to  pay  its  bills.  Clearly,  then,  we 
would  have  had  to  default  on  our  obligations,  or  to  have  issued 
bonds  ;  but  between  November  10  and  the  day  of  the  fii'st  bond 
sale  the  expenditures  exceeded  the  receipts  to  the  amount  of  $15,- 
644,743. 

This  sale  of  bonds  then  would  have  been  necessary,  and  in  fact 
would  have  had  to  have  been  made  a  little  sooner  than  it  was. 
But  let  us  suppose  that  it  had  been  made  at  the  very  time  it  was. 
It  would  have  put  $58,660,917.63  in  the  Treasury,  but  the  amount 
of  outstanding  debts  which  the  Government  would  have  then 
defaulted  upon,  and  which  would  have  had  to  be  paid  at  once, 
would  have  been  $15,917,902.  So  there  would  only  have  been  left 
in  the  Treasury  $42,743,015  after  the  proceeds  of  the  bonds  had 
been  paid  in  and  the  debts  settled.  But  the  expenditures  still  con- 
tinued to  exceed  our  receipts,  and  between  the  time  when  the  pro- 
ceeds of  the  first  sale  of  bonds  were  paid  into  the  Treasury  and  the 
15th  day  of  this  month  the  excess  amounted  to  $43,494,829,  from 
which  it  will  be  seen  that  the  available  assets  wotild  have  been 
again  wiped  out;  that  we  would  have  defaulted  on  our  obligations 

1728 


22 

to  the  amount  of  $751,813,  and  consequently  the  second  bond  issue 
would  have  had  to  be  naade.  If  this  does  not  show  that  the  legal 
tenders  have  not  occasioned  the  bond  issues  and  that  they  would 
have  been  necessary  if  there  had  been  no  national  currency  I  miist 
aclmowledge  my  inability  to  appreciate  the  force  and  effect  of 
figures. 

Mr.  Chairman,  there  is  another  matter  concerning  which  the 
most  grave  and  remarkable  misapprehension  prevails.  Some  per- 
sons seem  to  think  the  bond  issues  could  have  been  avoided  by 
redeeming  the  Treasury  notes  in  silver.  We  hear  the  question 
asked,  Why  do  they  not  pay  out  that  silver  instead  of  issuing  bonds? 

Mr.  Chairman,  there  has  been  and  is  no  silver  to  amount  to  any- 
thing in  the  Treasury  with  which  to  redeem  the  Sherman  notes. 

A  Member.    How  is  that? 

Mr.  BELL  of  Texas.  It  is  this  way:  The  silver  dollars  in  the 
Treasury  liave  practically  all  been  deposited  there  and  silver  cer- 
tificates taken  out  against  them,  and  these  silver  certificates  are 
in  circulation.  The  silver  dollars  do  not  belong  to  the  Govern- 
ment. It  is  only  the  trustee,  and  has  possession  of  them  for  the 
real  o^^^ler.  They  are  not  part  of  the  available  assets  in  the  Treas- 
ury. When  the  certificate  is  presented  and  the  silver  dollars  are 
taken  out,  the  certificate  is  destroyed. 

There  has  been  no  change  in  the  available  assets.  In  one  in- 
stance the  silver  certificate  was  outstanding  and  in  circulation,  and 
in  the  other  the  silver  dollars  are  out  and  in  circulation.  Only  the 
silver  coin  which  is  npt  represented  by  outstanding  certificates  be- 
longs to  the  Government  and  constitutes  a  part  of  the  available 
assets  of  the  Treasury,  and  that  amoimts  to  but  comparatively  lit- 
tle. If  all  the  silver  which  was  a  part  of  the  available  assets  of  the 
Treasury  had  been  used  to  redeem  Sherman  notes  it  would  not 
have  prevented  nor  materially  affected  the  necessity  of  the  bond 
issue.  I  will  illustrate  my  meaning  by  shovvang  the  condition  of 
the  Treasury  at  a  certain  date,  say  June  30, 1893.  There  was  on  that 
day  of  available  money  in  the  Treasiary  the  amount  of  $122,000,000 
in  round  numbers,  of  which  ^IS.-'jOO.OOO  was  in  silver,  including 
the  fractional  currency.  Suppose  on  that  day  the  Secretary  of  the 
Treasury  had  said,  "When  the  Sherman  notes  are  presented  for  re- 
demption I  will  pay  them  off  in  silver,"  and  that  the  $18,500,000  had 
been  used  for  that  purpose  and  paid. 

Mr.  GEAR.  If  the  gentleman  will  permit  me.  In  that  state- 
ment that  there  are  only  18,500,000  of  silver  dollars,  is  he  not 
mistaken  ? 

Mr.  BELL  of  Texas.  I  did  not  intend  to  say  18,500.000  silver 
dollars,  but  I  meant  to  say  $18,500,000  in  silver,  including  silver 
dollars  and  fractional  silver. 

Mr.  BYNUM.     Free  silver. 

Mr.  BELL  of  Texas.  Yes;  available  silver — silver  which  be- 
longs to  the  Government. 

Mr.  GEAR.  The  gentleman  means  the  total  residue  of  silver 
in  the  Treasury. 

Mr.  BELL  of  Texas.  Yes;  that  is,  the  silver  in  the  Treasury 
not  represented  by  outstanding  silver  certificates.  The  silver  held 
in  the  Treasury  against  which  the  certificates  are  outstanding  is 
no  part  of  the  available  assets  of  the  Government,  and  are  not  so 
treated  in  the  reports. 

1728 


23 

Mr.  GEAR.  The  gentleman  did  not  make  that  point  quite 
clear. 

Mr.  BELL  of  Texas.  I  am  very  much  obliged  to  you  for  call- 
ing my  attention  to  it.  This  is  a  matter  about  which  there  has 
been  a  great  deal  of  misunderstanding.  It  is  one  about  which  the 
people  have  been  very  much  misled,  and  I  desire  to  make  it  as 
plain  as  possible. 

Mr.  BLAND.  Will  the  gentleman  from  Texas  yield  to  me  for 
a  question? 

Mr.  BELL  of  Texas.    With  pleasure. 

Mr.  BLAND. '  I  wish  to  ask  the  gentleman  what  law  there  was 
against  coining  all  the  bullion  in  the  Treasury  and  using  that  for 
redemjjtion  purposes? 

Mr.  BELL  of  Texas.  There  is  none,  of  course.  That  has  been 
done  to  some  extent  and  ought  tq  be  done  to  a  much  greater  ex- 
tent. If  the  seigniorage  bill  which  passed  Congress  had  become 
a  law,  and  I  regret  exceedingly  that  it  did  not,  it  would  have  in- 
creased the  amount  of  the  available  assets  about  $55,000,000,  and 
instead  of  having  the  amount  of  the  available  assets  that  we  did 
have  on  hand  at  the  time  of  the  passage  of  the  law,  we  would 
have  had  $55,000,000  more.  I  am  talking  now  of  the  conditions 
applicable  to  the  Treasury  as  they  were,  not  as  we  would  have 
them.  You  understand,  of  course,  that  I  was  as  much  in  favor 
of  the  coinage  of  the  seigniorage  as  anyone., 

Mr.  BLAND.  But  the  point  I  wish  to  suggest  was,  that  the' 
present  law  authorized  the  coinage  of  the  biillion  to  redeem  the 
notes,  and  if  coined  we  would  have  had  a  good  deal  of  money  of 
that  kind  in  the  Treasury  for  that  purpose. 

Mr.  BELL  of  Texas.  As  the  Sherman  notes  were  presented  and 
redeemed  with  silver  there  would  have  been  an  increase  in  the 
available  assets  to  the  extent  of  the  seigniorage  on  the  silver  used 
to  redeem  those  particular  notes,  but  no  more.  It  would  not  have 
added  to  the  available  assets  the  amount  of  the  Sherman  notes 
redeemed. 

Mr.  BLAND.  I  do  not  think  the  gentleman  quite  understands 
my  point.  The  Sherman  law  provided  for  the  coinage  of  the  bul- 
lion to  redeem  the  notes  issued  against  the  bullion.  Now,  if  that 
law  hM  been  executed  we  would  have  had  money  to  redeem  the 
notes  on  presentation. 

Mr.  BELL  of  Texas.  Certainly;  biit  that  would  not  have  af- 
fected the  available  assets  in  the  Treasury,  except,  as  I  say,  to  the 
extent  of  the  difference  between  the  cost  of  the  silver  bullion  and 
the  number  of  dollars  it  would  coin  of  the  prescribed  weight  and 
fineness,  or,  as  it  is  called,  the  seigniorage. 

Mr.  BLAND.  But  it  does  affect  the  amotmt  that  may  be  paid 
on  the  redemption  of  the  notes.  They  could  have  been  redeemed 
in  silver  instead  of  gold. 

Mr.  BELL  of  Texas.  Certainly  they  could;  but,  as  I  say,  they 
would  not  have  affected  the  amount  of  money  on  hand  that  would 
have  been  available.  There  are  two  different  accounts  in  the 
Treasury.  One  is  the  money  that  belongs  to  the  Government, 
which  it  can  spend  in  paying  any  of  its  debts.  The  other  is  the 
coin  or  bullion  stored  in  the  Treasury  against  which  notes  and  cer- 
tificates are  outstanding.  Suppose  that  the  Sherman  notes  should 
be  preeented  for  redemption.  If  they  are  redeemed  in  silver,  the 
1728 


24 

silver  is  not  taken  from  the  available  silver  in  the  Treasury,  but 
from  the  silver  purchased  with  the  notes,  which  is  held  in  the 
Treasury  as  a  trust  fund,  and  constitutes  no  part  of  the  available 
assets.  The  Sherman  notes  then  taken  in  are  retired,  and  no 
change  has  been  made  in  tliu  available  assets  of  the  Treasury,  ex- 
cept, as  I  have  stated,  to  the  extent  of  the  seigniorage  realized 
from  the  coinage  of  the  silver. 

However,  this  raises  a  different  question  from  the  one  I  am  dis- 
cussing, and  in  order  to  eliminate  a  foreign  issue  I  will  illustrate 
my  point  by  assuming  that  instead  of  Sherman  notes  being  i)re- 
sented  for  redemption  greenbacks  are.  Now,  as  I  stated  awhUe 
ago,  there  was  on  the  30th  of  June,  1893,  $18,500,000  of  available 
silver  in  the  Treasury.  Suppose,  then,  that  $18,500,000  of  green- 
backs were  presented  for  redemption,  and  all  of  the  available  sil- 
ver paid  oiit  for  them.  There  would  have  been  no  increase  in  the 
available  assets,  but  the  character  of  assets  would  have  been 
changed  to  the  extent  that  there  would  have  been  no  silver  left, 
but  there  would  have  been  $18,500,000  more  of  greenbacks  than 
before  the  redemption. 

A  Member.     That  is  correct. 

;Mi'.  bell  of  Texas.  If  other  greenbacks  or  Treasury  notes 
were  presented  for  redemption  of  course  they  must  then  be  re- 
deemed in  gold.  As  I  have  already  shown,  from  the  30th  of  June, 
1893,  the  expenditures  of  the  Government  exceeded  the  receipts, 
and.  of  course,  our  necessities  would  have  compelled  us  to  pay  out 
the  $18,500,000  of  greenbacks  just  as  quick  as  it  would  the  $18,- 
500,000  of  silver.  So,  then,  there  would  have  been  no  difference 
if  the  silver  had  been  used  to  redeem  the  Sherman  notes  or  green- 
backs. 

In  fact,  Mr.  Chairman,  in  view  of  the  conditions  of  our  Treas- 
ury, the  bond  issue  was  inevitable.  It  is  with  this  Government 
^ust  like  it  is  with  one  of  us.  If  we  are  spending  more  than  our 
incomes,  it  is  only  a  question  of  time  when  we  get  to  the  point 
where  we  will  either  have  to  borrow  or  allow  our  paper  to  go  to 
protest.  I  have  never  felt  called  upon  to  apologize  for  the  bond 
issue.  I  did  not  do  so  upon  the  stump.  I  do  not  do  so  now.  But 
I  do  not  believe  we  are  dealing  candidly  with  our  constituents 
when  we  pretend  to  be  selling  bonds  for  one  purpose  and.  really 
are  selling  them  for  another.  I  regret  the  necessity  which  has 
compelled  the  issue  of  bonds  as  much  as  any  one  can,  and  if  the 
Democratic  Administration  which  is  now  in  control  of  the  Execu- 
tive branch  of  our  Government  is  responsible  for  it,  I  have  no 
apology  to  make.  If  it  can  be  shown  that  our  deficit  was  brought 
aboiit  by  the  extravagant  legislation  of  an  opposing  political 
party  I  have  no  question  but  that  the  American  people. will  locate 
the  responsibility  where  it  properly  belongs. 

I  think  that  the  deficiency  in  our  revenues  from  which  our  Treas- 
ury is  suffering  can  be  clearly  traced  to  the  reckless  extravagance 
of  the  Fifty-first  Congress,  of  which  the  Republicans  had  com- 
plete control,  and  I  will  submit  the  evidences  on  which  I  base  this 
claim. 

As  a  matter  of  fact,  since  the  legislation  of  the  Fifty-first  Con- 
gress has  manifested  itself  there  has  never  been  sufficient  revenue 
collected  to  meet  the  expenses  of  the  Government.  At  the  close 
of  the  first  fiscal  year  after  the  legislation  enacted  by  the  first  ses- 

1738 


25 

sion  of  the  Fifty -first  Congress  the  receipts  of  the  Government  were 
$17,167,569.41  less  than  the  expenditures.  This  deficit  was  made 
up  by  taking  that  amount  from  the  cash  in  the  Treasury.  The 
next  year  the  receipts  were  $27,659,736.32  less  than  the  expendi- 
tures. This  was  also  made  up  by  taking  that  amount  from  the 
cash  in  the  Treasury.  The  next  year  the  receipts  were  $4,367,070.21 
less  than  the  expenditures,  and  this  was  also  made  iip  from  the 
cash  in  the  Treasury.  And  last  year  the  expenditures  exceeded 
the  receipts  to  the  amount  of  $70,024,847.78. 

Mr.  LACEY.  Will  the  gentleman  permit  a  question  at  that 
point? 

Mr.  BELL  of  Texas.    Certainly. 

Mr.  LACEY.  In  the  estimate  you  have  given  the  committee 
showing  the  difference  between  the  expenditures  and  receipts  do 
the  expenditures  as  there  shown  include  what  was  paid  upon  the 
Government  bonds? 

Mr.  BELL  of  Texas.     Certainly. 

Mr.  LACEY.  Then  the  ordinary  expenses  did  not  exceed  the 
ordinary  receipts? 

Mr.  BELL  of  Texas.  The  ordinary  expenditures,  if  you  exclude 
the  amount  paid  to  the  sinking  fund,  did  not  until  the  last  fis- 
cal year.  But  the  sinking-fund  law  required  a  certain  amount 
to  be  paid  every  year  in  reducing  our  debt,  and  that  was  just  as 
much  a  part  of  the  expenditures  of  the  Government  as  anything 
else,  as,  for  instance,  the  expenses  incurred  by  this  body.  Noth- 
ing, perhaps,  could  better  show  where  the  responsibility  for  our 
insufficient  revenues  belong  than  the  course  of  the  last  Adminis- 
tration with  reference  to  this  sinking  fund.  During  the  first  part 
of  the  Administration  of  Mr.  Harrison  a  great  deal  of  money  was 
used  in  paying  off  our  interest-bearing  debt,  but  during  the  last 
half  of  the  Administration  almost  none  was;  and,  in  fact,  the  re- 
quirement that  about  $49,000,000  should  be  devoted  to  the  sinking 
fund  each  year  was  almost  entirely  ignored. 

Mr.  Chairman,  I  desire  to  digress  at  this  point  long  enough  to 
discuss  a  matter  which  is  not  exactly  germane  to  the  bill  we  are 
considering,  and  yet  it  assists  to  locate  the  responsibility  for  our 
troubles.  I  desire  to  correct  a  most  glaring  mistake  which  has 
been  heralded  broadcast  over  the  land,  and  in  order  to  do  so  I  will 
draw  a  comparison  between  the  expenditures  during  the  former 
Administration  of  our  present  President  and  of  his  successor. 

On  the  1st  day  of  March,  1885,  the  available  cash  on  hand 
amounted  to  $159,097,870.86.  During  the  next  four  years  the 
public  debt  was  reduced  $341,448,449.20,  and  still  the  available 
cash  on  hand  on  the  1st  day  of  March,  1889,  was  $183,269,220.85. 
During  the  next  four  years  the  debt  was  decreased  $258,799,727.35 
and  the  cash  had  dwindled  to  $124,084,742.28. 

It  will  be  seen  that  the  rediiction  of  the  public  debt  during  Mr. 
Cleveland's  former  Administration  exceeded  the  reduction  during 
Mr.  Harrison's  term  by  many  million  dollars.  But  the  point  I 
wish  to  call  attention  to  is  that  nearly  aU  the  reduction  made  dur- 
ing Mr.  Harrison's  Administration  occurred  prior  to  the  legislation 
of  the  Fifty-first  Congress. 

Mr.  LACEY.     "Will  the  gentleman  permit  a  question? 

Mr.  BELL  of  Texas.  After  a  minute.  Let  me  read  this  state- 
ment, and  then  I  will  be  very  glad  to  try  to  answer  your  ques- 
tion. 

1728 4 


26 

Between  March  1,  1889,  and  January  1,  1891,  the  public  debt 
was  reduced  to  the  amount  of  §225,459,498;  but  bet^veen  January 
1,  1891,  and  March  1,  1893,  it  was  reduced  only  $33,340,229,  and 
this  notwithstanding  the  fact  that  a  great  many  bonds  had  ma- 
tured and  had  to  be  extended  because  there  was  no  money  on  hand 
with  which  to  pay  them. 

Now,  I  will  take  pleasure  in  trying  to  answer  the  gentleman's 
question. 

Mr.  LACEY.  Independently  of  the  sinking  fund,  which  ab- 
sorbed a  considerable  amount  of  money  during  Mr.  Harrison's 
Administration,  there  were  bonds  actually  purchased. 

Mr.  BELL  of  Texas.  Yes;  during  the  first  part  of  it;  but  the 
point  I  make  is  that  they  did  not  comply  with  the  sinking-fund  law 
during  the  latter  part  of  Mr.  Harrison's  Acbninistration. 

Mr.  LACEY.  Independent  of  that,  there  was  actually  pur- 
chased $233,589,907  of  bonds  in  addition  to  those  that  were  paid 
through  the  sinking  fund. 

Mr.  BELL  of  Texas.  I  do  not  think  that  is  anything  like  cor- 
rect. But  the  fact  is  that  during  Mr.  Harrison's  Administration 
the  debt  was  reduced  $258,000,000,  as  I  have  stated. 

Mr.  LACEY.     But  you  give  no  credit  for  the  sinking  fund. 

Mr.  BELL  of  Texas.  I  think  the  gentleman  is  mistaken  about 
that.  The  amount  devoted  to  the  sinking  fund  is  included  in  the 
$258,000,000;  in  fact,  I  know  it  is.  From  what  does  the  gentleman 
read? 

Mr.  LACEY.  I  have  fiigures  copied  from  a  report.  The  report 
of  Mr.  Worthington  C.  Ford,  of  the  Bureau  of  Statistics. 

Mr.  BELL  of  Texas.  I  am  familiar  with  that  report.  It  was 
copied  in  a  speech  delivered  by  the  gentleman's  colleague,  General 
Henderson  of  Iowa,  delivered  in  last  August.  Of  course  we  all 
imderstand  that  General  Henderson  took  the  figures  from  the  re- 
port, which,  as  I  say,  is  entirely  erroneous.  There  never  was  a 
more  misleading  statement  published  throughoiit  the  country  for 
campaign  purposes  or  otherwise  than  that.  I  have  the  report  of 
the  Secretary  of  the  Treasiiry,  and  it  shows  the  mistakes  in  the 
statement  from  which  the  gentleman  has  read,  and  I  will  point 
them  out. 

Mr.  LACEY.  This  is  not  a  statement  from  my  colleague,  Gen- 
eral Henderson,  who  is  not  in  his  seat,  but  a  statement  of  Mr, 
Worthington  C.  Ford,  of  the  Bureau  of  Statistics,  whose  statement 
was  incorporated  in  the  speech  of  my  colleague. 

Mr.  BELL  of  Texas.  So  I  understand,  and  so  I  expressly  stated. 
I  referred  to  the  speech  simply  to  indicate  where  the  mistake  was 
given  piiblicity.  I  say  General  Henderson  was  mistaken,  and  of 
coiirse  I'do  not  assiune  that  he  intended  to  mislead  anybody  by  the 
mistake,  but  still  the  fact  remains  that  the  statement  is  astonish- 
ingly erroneous.  In  his  speech  General  Henderson  says,  "Mr. 
Harrison  during  his  term  paid  off  $233,588,950  of  the  public  debt 
of  the  country;  during  Mr.  Cleveland's  first  term  he  paid  off  only 
$143,884,350,"  and  he  refers  to  the  table,  from  which  the  gentleman 
has  .iust  read,  in  substantiation  of  his  statement. 

The  table  is  not  correct  in  that  it  does  not  give  Mr.  Harrison 
credit  for  reducing  the  debt  as  much  as  he  did  by  about  .$25,000,- 
000,  but  it  is  grossly  incorrect  in  that  it  does  not  give  Mr.  Cleve- 
land credit  for  reducing  the  debt  as  much  as  he  did  by  $197,000,- 
1728 


Ii7 

000.  The  error  occurs  in  this  way.  The  table  is  confined  to  the 
reductions  of  the  debt  made  on  the  bonds  which  bore  interest  at 
the  rate  of  4  and  4J  per  cent  per  annum.  During  Mr.  Cleveland's 
Administration  he  paid  off  bonds  to  the  amount  of  $1^^4,000,000 
that  were  drawing  interest  at  the  rate  of  8  per  cent  per  annum. 
These  bonds  are  not  taken  into  consideration  at  all — evidently  an 
oversight  on  the  part  of  the  official  who  prepared  the  table  from 
which  the  gentleman  reads.  However,  this  is  a  foreign  issue,  and 
I  will  therefore  revert  to  the  matter  under  consideration. 

The  point  I  am  making  is  that  up  to  the  time  the  legislation  of 
the  Fifty-first  Congress  had  become  operative  the  receipts  greatly 
exceeded  the  expenditures,  as  they  had  for  a  great  many  years 
prior  to  that  time;  and  as  an  evidence  of  this  I  call  attention  to 
the  fact  that  after  paying  the  ordinary  expenses  of  the  Govern- 
ment Mr.  Harrison  was  enabled  to  devote  many  millions  of  the 
surplus  revenue  to  the  satisfaction  of  the  interest-bearing  debt. 
But,  as  I  have  already  stated  several  times,  as  soon  as  the  legisla- 
tion of  the  Fifty-first  Congres'fe  became  operative  the  expenditures 
began  to  exceed  the  receipts,  and  have  continued  to  do  so  from 
that  time  until  this.  The  consequence  is  that,  as  I  have  shown, 
from  January  1,  1891,  to  March  1,  1893,  the  reduction  of  the  na- 
tional debt  was  very  small,  amounting  to  only  $33,340,229,  and 
practically  all  of  this  occurred  prior  to  the  1st  day  of  October, 
1891,  and  all  of  it  was  accomplished  by  using  the  cash  in  the 
Treasury,  for  the  available  cash  on  hand  decreased  from  $163, 242,- 
409  on  January  1,  1891,  to  $124,128,089  on  March  1, 1893,  or  $5,774,- 
091  more  than  the  debt  was  reduced. 

The  occasion  of  the  deficiency  in  our  revenue  was  not  so  much 
becaiTse  the  receipts  were  lessened  by  the  legislation  of  the  Con- 
gress to  which  I  have  referred  as  on  accoxint  of  the  enormous  in- 
crease in  the  expenditures  entailed  upon  us  by  the  extravagance 
of  that  body.  The  last  fiscal  year  was  one  of  almost  unparalleled 
depression;  consequently,  the  people  were  compelled  to  practice 
the  greatest  economy,  and  as  our  taxes  are  nearly  all  levied  upon 
consumption,  the  receipts  were  much  less  than  they  woiTld  ordi- 
narily have  been,  but  still,  if  the  expenditures  of  the'  Government 
exclusive  of  the  requirements  of  the  sinking  fund  had  been  the 
same  as  for  the  year  of  the  largest  expenditures  during  Mr.  Cleve- 
land's former  term,  we  would  have  collected  sufficient  revenue  to 
have  satisfied  all  demands  upon  us  and  have  had  many  millions  left 
with  which  to  reduce  our  indebtedness.  All  of  the  items  of  in- 
creased expenditures  are  attributable  to  the  laws  passed  by  the  Con- 
gress of  which  the  Republicans  had  control,  and  many  are  of  a  per- 
manent character. 

I  do  not  intend  to  follow  my  inclinations  and  branch  off  into  the 
discussion  of  a  collateral  matter,  and,  therefore,  while  I  do  not 
agree  that  such  is  the  case,  will,  for  the  sake  of  argument,  concede 
that  all  of  the  money  spent  in  pursuance  of  the  legislation  of  the 
Fifty-first  Congress  has  been  used  for  beneficial  purposes.  Then 
the  point  I  make  is  that  the  Republican  party,  having  occasioned 
our  enormous  expenditures  without  providing  adequate  revenues 
with  which  to  meet  them,  is  responsible  for  the  condition  pro- 
duced by  the  excess  of  our  expenditures  over  our  receipts. 

For  the  reveniie  laws  passed  in  last  August  the  Democratic 
party  is  responsible.  If  after  they  go  into  full  operation  they  fail 
1728 


28 

to  provide  sufficient  revenue  to  meet  all  demands  of  the  Govern- 
ment, including  a  reasonable  sum  to  be  ajiplied  each  year  toward 
the  li(iuidation of  the  inteitst-beuring  national  debt,  then  we  will 
have  failed  to  properly  discliarge  the  trust  contided  to  us.  That 
they  are  not  doing  so  now  is  known,  and  the  reason  is  plain. 
Pending  the  passage  of  our  new  revenue  laws  such  an  immense 
amount  of  sugar  was  brought  into  the  country  that  it  has  not  yet 
been  consumed.  When  it  is  and  sugar  has  to  be  imported  our  re- 
ceipts will  be  largely  increased  from  the  tax  on  that  article.  The 
distillers  took  from  the  bonded  warehouses  gi-eat  quantities  of 
liquors  to  avoid  the  additional  tax  which  we  imposed  upon  them. 
These  vnll  be  exhausted  soon,  and  our  receipts  from  that  source 
also  will  be  greatly  increased;  and  when,  in  addition  to  the  reve- 
nue we  thus  obtain,  we  begin  to  realize  from  the  income  tax  the 
embarrassment  of  our  Treasury  wall  be  completely  removed,  the 
gold  reserve  will  mount  iip  to  proper  proportions,  and  the  propo- 
sition to  retire  our  legal  tenders  will  be  heard  of  "no  more. 

But,  Mr.  Chairman,  if  the  issuance  of  bonds  was  rendered  nec- 
essary by  our  outstanding  legal  tenders,  have  they  been  such  a 
terrible  burden,  and  is  the  issuance  of  bonds  such  a  fearful  calam- 
ity ?  I  know  there  is  a  great  prejudice  against  the  bond  issues, 
and  that  those  who  desire  to  receive  the  profit  which  the  Govern- 
ment is  now  deriving  from  her  currency  are  playing  upon  this 
feeling  apd  trying  to  coerce  us  into  the  adoption  of  a  measure 
which  would  not  have  received  the  vote  of  one  out  of  each  fifty 
members  of  this  body  at  any  time  during  the  last  twenty  years. 
'We  should  not  allow  ourselves  to  be  carried  away  by  our  fears 
and  take  a  step  which  it  will  be  difficult,  if  not  impossible,  to  re- 
trace. After  all,  it  is  simply  a  question  of  profit  or  loss  on  the 
transaction.  The  proceeds  of  the  bonds  are  not  lost.  The  money 
realized  from  their  sale  has  gone  into  the  Treasury,  and  if  not 
spent  m  paying  our  ordinary  expenses  can  be  used  to  redtiL-e  our 
interest-bearing  debt  when  the  emergency  which  called  for  their 
issuance  has  past.  If  the  money  has  been  used  in  settlement  of 
our  current  liabilities  it  has  satisfied  just  that  much  of  our  in- 
debtedness which  had  to  be  met  sometime,  and  consequently  the 
Burplus  revenue  which  must  be  collected  with  which  to  pay  oflE 
our  bonds  will  accumulate  the  sooner.  All  we  would  lose  would 
be  the  interest  on  the  bonds.  But  if  the  entire  proceeds  of  the 
bond  sale  had  been  dumped  into  the  ocean  instead  of  paid  into  the 
Treasury  we  would  still  have  made  largely  by  keeping  out  our 
currency. 

Since  1879  we  have  had  on  hand  $100,000,000  in  gold  with  which 
to  redeem  the  legal  tenders.  If  this  sum  had  been  used  to  pay 
off  a  part  and  the  remainder  of  the  greenbacks  had  been  funded 
into  3  per  cent  bonds  at  the  time  they  became  convertible  into 
coin  the  interest  on  them  to  the  present  time  would  have  exceeded 
$118,000,000.  If  we  should  fund  our  legal  tenders  at  this  time  we 
would  increase  our  interest  charges  $12,000,000  per  annum.  If 
our  national  currency  was  not  prompt! j'  replaced  Avith  bank  notes 
the  contraction  of  the  circulation  would  work  untold  ruin  and 
disaster.  If  it  was,  under  the  provisions  of  the  proposed  law,  we 
would  have  given,  -wnthont  consideration,  to  the  banks,  privileges 
worth  millions  of  dollars  annually  to  get  them  to  do  what  the 
Government  co\dd  do  better. 

1728 


29 

Mr.  Chairman,  I  do  not  believe  that  there  is  a  general  desire 
among  the  national  bankers  of  the  country  for  the  passage  of  the 
bill  we  are  now  considering,  or  any  similar  measure.  I  believe 
that  a  very  large  majority  of  the  bankers  are  fair,  just-minded 
men,  who  do  not  expect  or  want  the  Government  to  grant  them 
special  favors.  Amongst  those  who  appeared  before  or  wrote  let- 
ters to  the  Committee  on  Banking  and  Currency  when  they  were 
having  their  hearings  were  many  of  the  most  prominent  and  lead- 
ing bankers  of  the  country,  and  it  is  refreshing  to  read  the  state- 
ments of  some  of  them.  Among  others  was  the  venerable  Enoch 
Pratt,  of  Baltimore,  a  gentleman  who  has  for  many  years  been  a 
leading  banker  and  successful  business  man,  and  who  is  at  present 
president  of  the  Clearing-House  Association  of  that  city. 

He  was  asked  the  question:  Do  you  think  it  is  desirable  to  retire 
the  greenback  circulation?    He  replied: 

No,  I  do  not.  I  would  like  to  have  the  Government  increase  it,  because  I 
know  it  is  safe,  and  I  would  like  to  have  them  altogether.  I  would  like  to  go 
in  for  safety.  I  think  the  Government  is  doing  a  right  thing  in  putting  cur- 
rency out. 

Another  one  of  the  gentlemen  who  appeared  before  the  commit- 
tee was  Mr.  W.  P.  St.  John,  president  of  the  Mercantile  National 
Bank  of  New  York. 

He  was  asked:  Are  you  opposed  to  the  retirement  of  the  green- 
backs?   If  so,  state  why;  and,  if  not,  state  why  not.    He  replied: 

I  am  opposed  to  asking  any  sacrifice  of  the  people  at  large  in  order  to  pro- 
vide profit  to  banks.  I  do  not  dare  ask  any  such  thing.  I  never  did  and  I 
never  will.  I  would  not  so  sacrifice  the  popularity  that  the  national  banks  of 
the  United  States  have  legitimately  earned.  The  great  popularity  to  which 
they  are  entitled  is  being  sacrifled  by  well-meaning  doctrinaires,  outsiders, 
who  know  Little  about  banking.  Think  of  it.  The  United  States  issues  $100,- 
000,000  of  bonds,  on  which  the  interest  is  to  be  paid  for  ten  years  at  5  per  cent 
per  annum.  At  the  same  time  it  is  proposed  that  $346,000,000  greenbacks,  a 
debt  which  does  not  bear  interest,  and  therefore  is  saving  (at  5  per  cent  per 
anmim)  $17,300,000  a  year  to  the  people  at  large,  shall  be  retired.  More  in- 
terest-bearing debt  to  issue  to  retire  them.  And  as  a  feature  of  the  proposal 
is  that  bank  notes,  yielding  profit  to  banks  as  the  first  essential  of  their  ex- 
istence, shall  supersede  them.    It  is  preposterous. 

Mr.  R.  I.  Lackland,  j)resident  of  the  Boatmen's  Bank  of  St. 
Louis,  wrote  the  committee  a  letter,  a  part  of  which  I  desire  to 
read: 

Boatmen's  Bank,  St.  Louis,  December  8,  189U. 

My  Dear  Sir:  I  have  yours  of  6th  instant,  and  regret  very  much  that  I 
can  not  appear  before  your  committee  in  Washington  City.  I  have  very 
decided  views  on  the  currency  question,  and  will  preface  this  by  saying  that 
I  have  been  in  active  business  smce  1837,  and  have  experienced  all  the  ills  of 
State-bank  money. 

I  do  not  approve  of  any  of  Mr.  Carlisle's  bill  for  many  reasons.  The  first 
to,  that  I  do  not  think  any  bank  ought  to  be  allowed  to  issue  paper  money. 
Why  should  a  bank  be  allowed  to  put  forth  their  bills  payable  as  money  any 
more  than  any  other  corporation  or  capitalist?  In  my  opinion,  it  is  giving  an 
undue  advantage  to  the  banks.  Nothing  ought  to  be  allowed  to  pass  as  money 
without  the  broad  seal  of  the  Government.  It  is  a  function  that  belongs 
exclusively  to  the  Government,  and  ought  not  to  be  delegated  to  any  other 
source. 

******* 

To  adopt  Mr.  Carlisle's  theory  of  banking  would  be  a  step  backward,  and  I 
would  regard  it  as  one  of  the  greatest  calamities  that  could  befall  this  coun- 
try. 

Very  truly,  yours, 

R.L  LACKLAND. 
Mr.  S.  W.  Cobb,  M.  C. 
In  the  district  I  represent  there  are  many  national  bankers,  and 

1728 


30 

if  any  of  them  favor  this  measure  I  do  not  know  it.  The  only 
letters  I  have  received  from  any  of  them  on  the  siibject  liaA-e  been 
in  oi)position  to  it.  Oiir  bankers  feel,  and  I  think  have  a  right  to 
feel,  that  it  is  an  unjust  discrimination  against  their  business  to 
compel  them  to  invest  a  certain  portion  of  their  capital  in  United 
States  bonds  which  jaeld  a  much  lower  rate  of  interest  than  they 
could  obtain  for  their  money.  I  believe  that  if  we  should  remove 
this  burden  and  place  them  on  the  same  footing  with  and  not  give 
them  any  advantage  over  other  citizens  we  would  fully  satisfy 
their  reasonable  desires  and  abate  all  prejudice  against,  and  obviate 
all  objection  to,  their  business. 

The  business  of  banking  consists  in  receiving  deposits,  loaning 
money,  and  dealing  in  exchange,  and  when  confined  to  these  ob- 
jects it  is  not  only  a  source  of  great  convenience,  but  of  untold 
benefits.  But  the  right  to  issue  currency  is  no  proper  attribute 
of  banking,  and,  as  I  have  shown,  it  has  been  exercised  by  the 
banks  for  the  past  ten  years  at  an  unnecessary  expense  to  the 
Government  and  at  a  continual  loss  to  them. 

Banks  are  indispensable  in  this  wonderfxiUy  business  and  com- 
mercial age,  and  we  ought  to  provide  the  very  best  banking  fa- 
cilities for  our  people  possible.  Safeguards,  in  the  way  of  exam- 
inations, reports,  and  otherwise,  have  been  thrown  around  the 
management  of  national  banks  lantil  they  show  the  largest  trans- 
actions with  the  least  loss  to  their  customers  of  any  similar  insti- 
tutions which  the  wisdom  of  man  has  yet  been  able  to  de\dse. 
Let  lis,  therefore,  strip  the  banks  of  their  objectionable  features 
and  leave  them  to  perform  their  legitimate  and  beneficent  func- 
tions. 

In  conclusion,  I  desire  to  submit  a  few  observations  on  that 
part  of  the  bill  which  provides  that  State  banks  may  issue  notes 
under  certain  prescribed  conditions. 

Mr.  Chairman,  I  have  always  understood  and  we  have  always 
contended  that  the  Federal  Government  had  no  right  to  inter- 
fere with  the  domestic  affairs  of  a  State.  If  we  pass  this  law  and 
recognize  the  right  of  the  National  Government  to  say  to  a  State, 
"You  may  charter  a  bank,  with  the  pri\alege  of  issuing  circula- 
tion, provided  you  do  so  under  the  limitations  we  impose,"  we 
ratify  and  confirm  the  legislation  of  the  Republican  party  which 
we  have  been  denouncing  as  unconstitutional.  As  a  Representa- 
tive I  voted,  and  woiild  be  glad  to  do  so  again,  to  repeal  the  tax 
on  State  bank  circulation,  because  I  do  not  think  it  a  proper  exer- 
cise of  the  taxing  power  by  the  National  Government  to  levy  a 
tax  not  imposed  for  the  piirpose  of  raising  revenue  but  solely  for 
the  purpose  of  preventing  the  exercise  of  a  privilege  which  has 
been  accorded  by  one  of  the  States  of  the  Union.  But  as  a  citi- 
zen of  one  of  those  States  I  should  oppose  its  granting  any  such 
privilege. 

Mr.  Chairman,  I  am  not  the  least  deluded  with  this  talk  about 
a  local  currency.  The  only  currency  which  will  be  local  is  one  of 
such  a  doubtful  character  that  it  will  not  circulate  anywhere  else. 
The  only  way  for  any  community  to  retain  money,  and  thereby 
have  a  local  currency,  is  to  maintain  a  balance  of  trade  in  its  favor. 
This  is  a  matter  in  which  the  laws  of  nature  are  superior  to  the 
laws  of  man.  LaM's  can  assist,  and  unfortunately  for  years  past 
they  have  assisted,  to  create  a  balance  of  trade  in  favor  of  some 
1728 


31 

and  against  other  sections  of  our  common  country.  As  long  as  an 
adverse  balance  of  trade  exists,  however  brought  about,  the  drain 
of  money  will  continue,  and  any  proposed  remedy  for  that  state 
of  affairs  which  does  not  recognize  this  fact  will  be  purely  tempo- 
rary and  entirely  ineffectual.  I  think  the  misunderstanding  on 
this  point  arises  from  the  fact  that  we  sometimes  confuse  capital 
with  money.  If  we  have  capital,  that  is,  a  surplus  of  earnings, 
money  inevitably  accompanies  it.  If  we  do  not  have  capital,  but 
on  the  contrary  spend  more  than  we  make,  money  leaves  us  to  ad- 
just the  adverse  balance.  Our  troubles  throughout  the  South  and 
West  are  caused  infinitely  more  by  the  improper  distribution  than 
from  an  insufficient  volume  of  money,  and  the  only  remedy  for 
this  state  of  affairs,  so  far  as  it  can  be  effected  by  laws,  is  in  re- 
moving the  restrictions  on  commerce,  which  compel  the  citizens 
of  some  parts  of  our  country  to  buy  in  a  restricted  and  therefore 
a  high  market,  while,  from  the  very  nature  of  their  calling,  their 
surplus  productions  must  be  sold  and  their  prices  fixed  in  an  un- 
restricted and  therefore  cheap  market. 

Mr.  Chairman,  I  regret  to  have  to  appear  in  the  ungracious  role 
of  criticism,  and  will  not  do  so  without  venturing  to  suggest  a 
remedy  which  I  think  would  prove  adequate,  would  remove  the 
embarrassments  under  which  our  Treasury  is  now  laboring,  and 
supply  an  ample  volume  of  currency  with  which  to  enable  our 
people  to  transact  their  business. 

In  the  first  place,  then,  if  it  is  not  certain  that  our  revenue  laws 
will  vory  soon  cause  our  receipts  to  exceed  our  exjDenditures,  I 
would  amend  them  so  that  they  will  do  so.  Next,  I  would  pro- 
vide for  the  retirement  of  the  bank  notes  and  the  substitution 
of  a  like  quantity  of  legal-tender  paper.  I  would  not  do  this  pre- 
cipitately, or  in  a  manner  that  might  further  derange  business. 
I  would  proceed  with  the  utmost  caution,  and  not  so  much  with  a 
view  of  effecting  immediate  and  radical  changes  in  the  fiscal  policy 
of  our  Government,  however  desirable  they  might  be,  as  of  antici- 
pating and  providing  for  contingencies  that  may  arise  in  the  future. 

I  would  repeal  the  requirement  that  national  banks  should  in- 
vest in  United  States  bonds.  They  would  then  gradually,  as  the 
bonds  are  paid  off,  cease  to  be  banks  of  issue  and  become,  what 
they  should  be,  banks  of  discount  and  deposit. 

I  would  authorize  banks  to  issiie  notes  to  the  par  value  of  the 
bonds  held  by  them,  not  to  exceed  an  amount  equal  to  their  paid- 
up  and  unimpaired  capital.  The  effect  of  this  would  be  to  cause 
a  very  greatly  to  be  desired  increase  in  the  volume  of  our  cur- 
rency. In  most  sections  there  would  be  but  little  profit  to  the 
banks  in  issuing  their  notes,  and  where  the  use  of  the  money  was 
worth  8  per  cent  per  annum  there  would  be  none  with  the  bonds 
commanding  the  premium  they  now  do;  but,  taking  the  country 
over,  the  banks  could  issue  currency  to  meet  an  unusual  demand 
for  it  without  any  considerable  loss  to  themselves. 

I  would  provide  that  whenever  any  bank  retired  any  of  its  notes 
a  like  amount  of  United  States  notes  should  be  issued  in  lieu 
thereof  and  put  in  cu'culation  by  purchasing  bonds  to  the  amount 
that  could  be  bought  with  them.  In  this  way  we  would  be  con- 
verting oiir  interest-bearing  into  a  noninterest-bearing  debt  to  the 
extent  of  the  outstanding  bank  currency,  and  at  the  same  time 
prevent  a  repetition  of  the  injurious  effects  which  follow  in  the 
1728 


32 

wake  of  a  shrinking  volume  of  the  circulating  medium.  I  mean, 
of  course,  that  the  Grovernment  should  buy  the  bonds  in  the  open 
market  as  it  has  done  in  the  past.  If  one  owner  of  bonds  did  not 
wish  to  sell  others  would,  and  there  would  be  no  objection  to  ac- 
cepting our  national  currency  in  pajTuent  as  long  as  it  was  con- 
vertible into  coin. 

But,  it  may  be  asked,  why  not  have  the  Government  bills  sub- 
stituted for  bank  bills  at  once?  There  are  several  objections  to 
this.  One  is  that  we  can  not  pay  off  the  national  bonds  until  they 
mature  without  paying  such  a  large  premium  as  to  make  it  a  dis- 
astrous transaction  from  a  business  standpoint.  They  will  con- 
tinue to  draw  interest,  and  the  expense  to  the  Government  will 
be  the  same  whether  the  bonds  are  held  by  the  banks  to  secure 
circulation  or  by  others  as  investments.  At  present  the  Govern- 
ment realizes  from  the  tax  on  circulation  nearly  $2,000,000  per 
annum,  which  would  be  lost  if  the  bank  bills  were  retired,  and 
this  without  any  compensating  benefits;  besides,  the  very  act  of 
suddenly  withdi-awing  one  kind  and  substituting  another  kind  of 
currency  to  the  amount  of  the  outstanding  bank  bills  would  com- 
pletely disorganize  all  business  undertakings,  whereas,  if  the  same 
thing  should  be  done  gradually,  as  would  necessarily  be  the  case 
since  only  $3,000,000  in  bank  notes  can  be  retired  in  one  month, 
no  evil  results  would  be  experienced. 

By  adopting  the  suggestions  I  have  now  made  I  am  sure  we 
would  accomplish  all  needed  reform  in  our  currency,  provide  for 
its  necessary  expansion  to  meet  the  growth  of  our  population  and 
the  developement  of  our  business  for  many  years  to  come,  and  at 
the  same  time  avoid  all  the  danger  and  demoralization  which  nec- 
essarily attends  any  radical  change  from  the  existing  order  of 
things. 
1728 


3  CONGEESe 


some  days  past,  but  the  trouble  seemed  to  be  over  the  "  coin  "  bonds, 
of  gold  bonds.  Mi-.  Belmont  declined  to  discuss  the  matter  with  tl 
reporter,  but  there  is  the  best  reason  for  saying  that  nothing  will 
summated  until  Assistant  SecretaryCurtis  gets  back  to  Washington  : 
before  the  Administi-ation  the  results  of  his  trip  here. 

NEW  YORK  FINANCIERS  HERE. 

[Washington  Post,  February  6, 1895.] 

The  Cabinet  yesterday  was  engaged  for  four  and  a  half  hours  in  di 
the  impending  bond  issue:  but  if  any  conclusion  was  reached  it  w, 
known  by  Secretary  Carlisle  that  the  time  for  giving  publicity  the: 
not  arrived.  That  a  bond  issue  is  likely  to  occur  within  a  day  or  two 
ever,  generally  regarded  as  certain. 

Yesterday  was  one  of  conflicting  rumors  and  intense  interest  al 
forthcoming  issue.  Several  well-known  bankers  and  capitalists  arrii 
from  New  York,  and  all  day  yesterday  conferences  were  held  bt-twci 
gentlemen  and  prominent  Government  officials.  Among  the  promini 
York  bankers  now  here  are  August  Belmont,  representing  the  Rothsc 
Pierpont  Morgan,  and  Messrs.  Speger  and  Bacon. 

Wednesday  night  the  President,  Secretary  Carlisle,  and  Mr.  Morg, 
in  conference  at  the  Executive  Mansion  xiniil  a  late  hour.  Mr.  Belm 
seen  the  Secretary  earlier  in  the  afternoon.  Yesterday  morning  tht 
ence  was  resumed  with  Mr.  Morgan.  An  industriously  circulatec 
stated  that  Mr.  Belmont  had  withdrawn  from  all  participation  in  tht 
of  placing  the  loan  abroad,  leaving  the  bonds  to  be  taken  by  Americ 
ers. 

SENSATIONAL  REPORTS. 

Rumors  that  there  were  disagreements  in  the  Cabinet  on  se^'eral 
connected  with  the  bond  issue  became  rife  after  the  Cabinet  adjour 
could  be  traced  to  no  reliable  source.  Mr.  Belmont  called  at  the  Tre 
the  afternoon  and  had  a  confei'ence  with  Mr.  Curtis,  but  received 
mation  as  to  the  results  of  the  Cabinet  session.  The  President,  A 
General  Olney,  and  Secretary  Carlisle  were  together  at  the  Execut 
sion  as  early  as  10  o'clock,  and  Secretary  Carlisle  did  not  return  to  tt 
ury  until  nearly  5  o'clock  in  the  afternoon.  He  authorized  the  st 
that  rumors  of  dissensions  in  the  Cabinet  were  unfounded.  One  thr 
he  had  resigned  it  was  ascertained  was  without  the  shadow  of  fori 
Secretary  Carlisle  himself  would  not  dignify  this  rumor  by  a  denial. 

The  Treasury  yesterday  gained  $656,000  In  gold,  increasing  the  golc 
at  the  close  of  business  to  $43,304,642. 

All  of  this  talk  of  a  bankrupt  Treasury,  need  of  legislat 
and  gold  necessities  are  the  rantings  of  those  in  power  to 
this  ruinous  gold  system  or  the  vaporings  of  incompetents  t 
by  Treasury  looters. 

The  London  Status  of  February  3,  the  financial  organ  of  ■ 
servative  money  classes  of  Europe,  lets  the  cat  out  of  the  b 
mits  that  the  President's  plan  is  that  desired  by  the  capital' 
that  the  silver-coinage  plan  of  the  South  and  West  would  1 
these  two  countries  and  would  not  hurt  the  productive  ind 
but  would  stimulate  them,  but  would  hurt  the  money- 
classes  of  both  hemispheres,  viz: 

[From  the  Rocky  Mountain  News,  February  2, 1895.] 

London,  February 

The  Statist  will  say  to-morrow: 

"President  Cleveland's  message  appears  to  be  wise  and  statesman 
the  law  stands,  it  is  quite  clear  that  a  lai'ge  sum  should  not  be  bor 
Europe,  as  there  is  doubt  respecting  the  President's  ability  to  contra 
gold.  This  would  be  fatal  to  any  projected  loan.  Money  can  alwa^ 
at  a  price,  but  the  Government  of  the  United  States  can  not  act  as  i 
bankrupt.  Its  credit  would  stand  as  high  as  that  of  any  country  in  t 
if  Congress  would  only  do  its  duty.  It  the  present  Congress  does  r 
is  greatly  feared  that  it  will  be  too  late  to  appeal  to  the  new  Congrc 
fore  it  can  be  called  together  a  crisis  will  probably  have  occurred.  I 
tionable  whether  under  the  existing  conditions  the  President  can  eve 
at  home.  The  banks,  in  order  to  avert  a  panic,  may  furnish  him  v 
but  even  then  it  is  questional  ile  whether,  when  a  doubt  exists  resxiec 
ment  in  gold,  enough  gold  can  be  got. 
1835 


FIFTY-THIRT^   COlSraRESe?,  THIRD   SESSION. 


HON.    JOHN     0 .    BELL, 


In  the  House  of  Kepbesentatttbs, 


<  Jiilared  from  tlie  floor  of  the  Senate  in  ISttfl 


:i]iitalist8  in  the 

from  the  Trens- 

plfsof  jtisHoo.in 


'  such  legislation.    One  t 
old  "boads,  and  both  are  intended  t' 


I  by  the  New  York  Pres.-^ 


Every  Secretary  of  the  Treasury,  from  and  including  Hugh  Mo- 

.,ii„„i.    !,„„  .;.! . .1  .■„;..„  ^ "gold  coin"  or 

Btroke  of  public 


bolder  a 


would  r 


a  large  public  creditor  to  choose  the  kind  of  money  they 

On  tbe  legislature  of  Ohio  passing  a  joint  resolution  in  lfi77 
aeelaring  that  common  honesty  and  justice  to  the  taxpayers 
required  tbe  Government  bonds  to  be  paid  in  gold  or  silver  at  the 
option  of  the  Government,  Senator  Mntthews  took  up  the  matter 
in  tbe  Senate  of  the  United  States  early  in  187B  and  had  a  ji.int 
resolution  passed  in  the  Senate  and  in  this  House  declaring  that  it 
waa  not  in  derogation  of  the  public  faith  or  in  riolation  of  the 


lars,  at  the 


the  bonded  debt  of  the  Government  in  ^ver  dol- 
~n  of  tbe  Government, 


.   -No:  I  would 
',  which  photo- 


2 

CONGRESSIOKAL  RECORD. 

SSJS'nS"  '<!','  rV,"!,;;;;!;'',';:.: 

=iii:c:-,rg 

,:::..._,.„, 

3.:,; 

'-'r'-M- 

p^'' 

] 

andgol'i  I ir  .  ■ 

by  TreaiurvtV,-  ", 

TheLoD.l..iiSl.,!M      ■   i 

initetliatthePiVM.i.iii  -  ,., , 
that  the silver-com;i;:r  pl.Li, 
these  two  countries  ail. 1  '.v..! 
but  would  stimulate  tli.m 
classes  of  both  heiui9plivu:>. 

Ml' ;;;i,;M:, ,;;  ,,„  :„,.„  , 

thobiwiitaiifc,lti»  qiHt..  ■■>..:.., 

Loif  DOH,  Fibi-uari  I,  » < 

bftSSup?!    Itacnf.l'iVV. . 

SmF'''-' 

,,.;is£ssHsS 

at  the  dictation  of  the  ci-e 
aeem  to  have  full  possession 

at  creditor  classes  of  the  world  tha' 
of  the  Administratiou. 

• 


SIGNAL  EECOllD. 


WANTS  MOKE  CONTRACTION. 

"  In  any  caso,  mere  borrowing  will  not  avail,  as  the  experience  of  the  past 
year  has  shown  tliat  sooner  or  later  there  must  be  a  contraction  of  the  cur- 
renry  ..r  tluTi'  will  be  a  panic." 

Till'  Statisi  1)1 eeds  to  discnss  the  consequences  in  the  event,  firstly,  of 

gold  bt^iuLC  (It'ui'iiu'tized:  secondly,  no  legislation  whatevi>r  bi'ing  arrived  at; 
thirdly,  tin-  etfcct  of  the  tree  i-oiluiLre  of  silver.    Theii  the  Statist  remarks: 

"  It  gold  is  demonetized,  it  is  iierlVrtly  clear  that  there  will  be  a  great  trans- 
fer of  property  from  the  capitalist  and  lending  classes  to  the  producing  and 
borrowing  classes.  This  would  be  of  immense  advantage  to  the  West  and 
South  and  would  prove  a  sei'if)us  loss  t<^  tlu^  Rastern  States  and  to  Europe. 

INI'LUK.VOK  ON  TirE  MAHKET. 

"Of  course  a  great  country  like  the  United  States  adopting  a  silver  standard 
would  have  great  influence  on  the  whole  of  the  world,  and  silver  would  un- 
doubtedly rise,  but  it  would  be  long  before  it  reaclu'd  til)  pence.  The  great 
reduction  of  debts  all  over  the  United  States  by  a  fall  t(  i  silver  would  give  the 
farming  and  producing  clas.ses  generally  a  seiise  of  freedom  and  prosperity 
which  they  liav(>  not  had  for  many  y(>ars,  and  would  probably  give  a  great 
stimulus  ti)  prodiK'tion.  If  silver  did  not  rise  much  tor  a  while,  Aniei'ican 
wheat,  cotton,  pork,  etc.,  would  compete  witli  the  product  of  other  countries 
at  a  very  gi-eat  advantage,  and  there  would  jiroliably  be  a  very  rapid  and 
great  growth  of  e.Ki>orts  and  the  beginning  of  an  era  of  great  prosperity. 

"On  the  other  hand,  the  lending  and  creditor  classes  wonldsuffer  anit  their 
losses  woul(l  not  atfect  i)roduction  to  anything  like  the  same  extent  as  the 
gains  of  the  del)torsand  pi-odueeis  woidddo.  Further,  there  would  be  a  very 
serious  fall  in  stH-nritios,  which  would  injure  capitalists  and  lenders,  both  in 
the  United  States  and  Europe. 

'•  If  Congress  refuses  legisl;ition,  then  gold  would  go  a  premium,  but  prob- 
ably not  high.  The  tendem-y  would  still  be  to  benefit  debtors  and  producers, 
and  would  injure  capitalists  and  lenders,  while  production  and  exports 
would  be  stimulated,  though  not  to  a  great  extent. 

WOULD  REDUCE. 

"Thirdly,  if  the  mints  were  opened  to  free  coinage,  which  would  tend  to 
make  the  gold  premium  higher  still,  the  premium  would  not  be  very  high, 
and  the  reduction  of  the  debt  and  the  losses  of  capitalists  would  be  small 
compared  with  the  demonetization  of  gold." 

Summing  up  this  review  of  the  financial  pos.sibilities,  the  Statist  represents 
the  West  and  South  as  being  jierfectly  I'ight  in  the  view  that  a  change  of  the 
present  system  would  benetit  tlieir  sections  of  the  Union.  The  effect  of  the 
change  tliey  advocate  would  be  a  tendencv  to  transfer  property  by  wholesale 
from  the  Easl  and  Eurojje  to  the  West  an^  South.  In  fact  it  would  be  a  form 
of  repudiation,  and  it  would  lower  the  credit  of  the  United  States  and  pre- 
vent the  free  influx  of  Eur(jpean  capital.  In  the  future,  proliahly,  European 
capitalists  will  always  insist  ui)on  the  gold  clause— they  will  require  a  clear 
contract  that  they  will  be  repaid  in  gold. 

"In  the  event  of  gold  demonetization,  matters  will  right  themselves  in  the 
long  run,  but  the  run  might  be  very  long,  and  another  i)oint  is  that  a  great 
ti'ansfer  of  property  would  not  act  uniformly.  Debts  falling  due  soon  after 
the  change  would  be  immensely  reduced,  whereas  debts  falling  due  lat^r, 
when  silver  has  risen,  would  be  less  reduced,  and  if  silver  reached  (50  pence 
there  would  be  no  reduction  in  debts  whatever." 

The  great  indebtedness  of  the  country  and  limited  money  sup- 
ply are  the  chief  causes  of  our  present  difficulties,  and  you  now 
propose  to  increase  it.  It  is  mere  cant  and  false  pretense  to  talk 
about  the  danger  of  a  silver  basis  or  the  danger  of  a  suspension 
of  specie  payment,  heralded  to  the  world  daily.  During  one  of  our 
most  prosperous  periods  we  were  under  a  complete  suspension. 

The  Bank  of  England  from  time  to  time,  once  for  a  period  of 
twenty-five  years,  and  the  Bank  of  Franc;e  in  1818  and  1870,  sus- 
pended s])ecie  payment  till  a  convenient  time  and  came  out 
stronger  than  ever.  The  banks  of  New  York  in  the  late  panic 
suspended  all  money  payments  and  came  out  vrithout  discredit, 
and  this  Groveniment,  if  it  desired  to  serve  the  people  instead  of 
the  banks,  has  ample  power.sto  protect  the  Treasury  and  the  peo- 
ple, but  it  refuses,  and  is  ])layingthis  game  of  cant  and  hypocrisy 
at  the  dictation  of  the  great  creditor  classes  of  the  world  that 
seem  to  have  full  possession  of  the  Administration. 


The  Plighted  Faith  of  the  Nation.' 


SPEECH 


OF 


HON.  FRANK  E.  BELTZHOOVER, 


OF   PENNSYLVANIA, 


IN  THE 


House  of  Representatives, 


TUESDAY,  JANUARY  8,  1895. 


"We  denounce  the  failure  (of  the  Republican  Party),  for  all  these 
eleven  years  of  peace,  to  make  good  the  promise  of  the  legal-tender 
notes,  which  are  a  changing  standard  of  value  in  the  hands  of  the 
people,  and  the  nonpayment  of  which  is  a  disregard  of  the  plighted 
faith  of  the  nation." 

DEMOCRATIC  NATIONAL  PLATFORM,  1876. 


WASHINGTON. 
1895. 


SPEECH 

OF 

HON.  FRANK  E.  BELTZHOOVER. 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.8149)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes — 

Mr.  BELTZHOOVER  said: 

Mr.  Chairman,  I  desire  to  present  and  have  read  an  amendment 
which  I  shall  propose  to  the  pending  bill  at  the  proper  time. 

The  amendment  was  read,  as  follows: 

Mr.  BELTZHOOVER  moves  to  amend  the  substitute  offered  for  the  pending 
bill  by  adding  a  new  section,  to  be  numbered— 

"Sec.  12.  To  enable  the  Secretary  of  the  Treasury  to  fund  the  Treasury 
notes  of  the  United  States  which  may  remain  in  circulation  after  the  1st  day 
of  August,  1895,  which  were  issued  under  the  act  approved  February  25,18(53, 
entitled  'An  act  to  authorize  the  issue  of  United  States  notes  and  for  the  re- 
demption and  funding  thereof,  and  for  funding  the  floating  debt  of  the  United 
States,'  and  under  the  act  approved  July  11, 1862,  entitled  'An  act  to  authorize 
an  additional  issue  of  United  States  notes,  and  for  other  purposes,'  and  under 
the  act  approved  March  3, 1863,  entitled  'An  act  to  provide  ways  and  means 
for  the  support  of  the  Government,'  and  under  the  act  approved  July  14, 
1890,  entitled  'An  act  directing  the  purchase  of  silver  bullion  and  the  issue  of 
Treasury  notes  thereon,  and  for  other  purposes,'  he  is  hereby  authorized  to 
issue  on  the  credit  of  the  United  States,  coupon  or  registered  bonds  to  an 
amount  not  exceeding  $500,000,000,  redeemable  at  the  pleasure  of  the  United 
States  after  five  years,  and  payable  twenty- five  years  from  date,  and  bearing 
interest  at  the  rate  of  3  per  cent  per  annum,  payable  semiannualy  in  gold 
coin. 

"  The  bonds  herein  authorized  shall  be  of  such  denominations,  not  less  than 
S50,  as  may  be  determined  on  by  the  Secretary  of  the  Treasury,  who  may 
dispose  of  such  bonds  at  any  time,  at  not  less  than  the  par  value  thereof,  for 
gold  coin  of  the  United  States,  or  for  any  of  the  aforesaid  Treasury  notes, 
which  when  received  shall  be  canceled;  and  all  such  bonds  shall  be  exempt 
from  all  taxation  by  or  under  national.  State,  or  municipal  authority." 

Mr.  BELTZHOOVER.    Mr.  Chairman,  there  are  three  things 

which  now  perplex  the  Secretary  of  the  Treasury:  First,  how  to 

protect  the  gold  reserve  from  the  constant  assaults  made  upon  it 

by  the  redemption  of  Treasury  notes;  second,  how  to  retire  and 

cancel  these  notes  without  unduly  contracting  the  volume  of  the 

currency,  and  third,  how  to  raise  revenue  sufficient  to  run  the 

Government.     The  amendment  which  I  have  offered  vdll  meet 
3  1742 


very  clearly  the  first  difficulty,  and  if  adopted  as  a  part  of  the 
pending  measure  would  probably  render  it  efficient  to  remedy  also 
^he  second.  These  are  the  only  aspects  of  the  subject  which  come 
within  the  jurisdiction  of  the  Committee  on  Currency,  and  there- 
fore the  only  ones  which  can  now  be  properly  considered. 

The  most  interesting  and  comprehensive  character  which  has 
ever  been  portrayed  by  human  genius  and  germane  to  this  discus- 
sion is  WilMns  Micawber.  He  was  always  indulging  in  long, 
windy  speeches;  always  voraciously  hungry;  always  hounded  by 
numerous  creditors;  always  expecting  something  to  turn  up  to  re- 
lieve his  situation;  always  paid  his  debts  by  giving  his  note,  and 
when  the  note  fell  due  always  gave  a  new  note  in  exchange,  ex- 
claiming as  he  did  so,  "Thank  God!  there's  another  debt  paid." 
He  was  the  type  and  ideal  of  a  vast  number  of  the  financiers  of  the 
world,  and  if  his  life-sized  bust  does  not  adorn  the  room  of  the 
Committee  on  Banking  and  Currency  there  has  been  a  gross  dis- 
regard of  the  eternal  fitness  of  things. 

The  history  of  the  world  is  filled  with  Micawbers,  who  discharged 
their  debts  by  promises  to  pay,  and  nations  have  been  the  chief 
imitators  of  this  historical  character.  The  Carthagenians  wrote 
their  promises  on  leather;  the  Romans,  in  their  palmiest  days,  on 
strips  of  wood;  the  Moguls,  on  mulberry  bark;  the  semicivilized 
citizens  of  sundry  lands,  on  the  skins  of  animals,  and  their  linea 
successors  in  the  Bureau  of  Engraving  and  Printing  put  theirs 
on  paper.  The  greatest  of  all  the  apostles  of  paper  money  was 
old  Kooblai  Khan,  whom  Coleridge  has  immortalized,  who  issued 
during  his  brief  reign  more  than  $600,000,000  of  mulberry  bark 
legal-tender  notes,  which  went — 

Wliere  Alf  the  sacred  river  ran, 
Through  caverns  measureless  to  man 
Down  to  a  sunless  sea. 

The  fiat  money  of  all  ages  and  climes  has  gone  down  the  setme 
dark  and  fathomless  abyss.  The  experiment  was  tried  in  the  con- 
tinental money  of  the  Revolution,  and  when  the  founders  of  the 
Republic  met  to  frame  its  fundamental  law  they  profited  by  the  sad 
experience  and  the  teachings  of  history.     Thomas  Jefferson,  the 

father  of  the  party  to  which  we  belong,  was  thoroughly  imbued 
1742 


with  this  idea,  and  in  writing  to  Colonel  Carrington  on  May  27, 

1788,  while  the  Constitutional  Convention  was  in  session,  declares: 

The  bankruptcies  in  London  have  recommenced  with  new  force.  There  is 
no  saying  when  this  fire  will  end,  perhaps  in  the  general  conflagration  of  all 
their  paper.  With  only  twenty  millions  of  coin,  and  three  or  four  hundred 
millions  of  circulating  paper,  public  and  private,  nothing  is  necessary  but  a 
general  panic  produced  by  failures,  invasion,  or  any  other  cause,  and  the 
whole  visionary  fabric  vanishes  into  air  and  shows  that  paper  is  poverty; 
that  it  is  only  the  ghost  of  money  and  not  money  itself. 

The  convention,  admonished  by  such  teachings  which  were  ac- 
cepted by  almost  all  the  leading  statesmen  of  that  day,  gave  to 
Congress  no  power  on  the  subject  except  "to  coin  money  and  reg- 
ulate the  value  thereof."  The  strictest  construction  of  this  provi- 
sion of  the  supreme  law  was  the  policy  of  the  Democratic  party 
from  its  birth  down  to  1868,  and,  with  the  exception  of  the  unfor- 
tunate declaration  in  its  national  platform  of  that  year,  has  been 
ever  since.     In  its  first  platform,  in  1836,  it  declared  an — 

Unqualified  hostility  to  bank  notes  and  paper  money  as  a  circulating  medium, 
because  gold  and  silver  is  the  only  safe  and  constitutional  money. 

That  doctrine,  with  the  modification  of  paper  convertible  into 
coin  on  demand,  has  been  adhered  to  consistently.  This  was  the 
policy  not  only  of  the  Democratic  party  but  of  the  Government 
from  its  establishment  down  to  1862.  When  the  war  of  the  re- 
bellion threatened  the  destruction  of  the  Republic  the  great  prin- 
ciple of  self-preservation,  which  is  the  first  law  of  nations,  became 
supreme  and  superseded,  as  it  had  a  right  to  do,  all  constitu- 
tional and  statutory  provisions .  Inter  arma  silent  leges .  When  the 
Treasury  was  empty  and  our  armies  in  the  field  and  our  sailors 
on  the  sea  were  unpaid.  Congress,  by  the  act  of  February  25, 
1862,  authorized  the  issue  of  $150,000,000  of  Treasury  notes,  based 
on  the  credit  of  the  United  States.  By  the  act  of  July  11,  1862, 
another  $150,000,000  of  similar  notes  were  authorized  and  issued. 
By  the  joint  resolution  of  January  17,  1863,  an  additional  $100,- 
000,000  were  authorized  for  the  immediate  payment  of  the  Army 
and  Navy  of  the  United  States.  This  last  issue  was  fiu'ther  legal- 
ized by  the  act  of  March  3,  1863,  which  increased  the  amount  by 
$150,000,000,  making  the  aggregate  of  such  Treasury  notes  $450,- 
000,000. 

All  these  acts  distinctly  recognized  the  fact  that  these  notes  were  an 
1742 


6 

einerj^ency  loan  for  the  preservation  of  the  Government  and  pledged 
pajiuent  to  the  holders  in  coin.  The  acts  of  1862  and  1863  provided 
that  bonds  of  the  United  States  bearing  interest  should  be  sold,  and 
that  the  holders  of  these  Treasury  notes  had  the  right  to  convert 
them  into  such  bonds.  These  acts  further  provided  that  all  im- 
port duties  of  the  Government  should  be  paid  in  coin,  and  that 
these  accumulations  of  coin  should  be  used  fii-st  to  pay  the  inter- 
est on  the  Government  bonds,  and  second  to  the  redemption  of 
such  bonds.  These  Treasury  notes  thus  issued  on  the  credit  of  the 
United  States  were  therefore  redeemable  in  coin  by  the  law  cre- 
ating them. 

Their  constitutionality,  for  the  reasons  already  stated,  was  con- 
tested, but  after  the  most  exhaustive  discussion  theii*  issue  was 
held  in  1870  to  be  a  constitutional  exercise  of  the  power  of  Con- 
gress as  an  "  appropriate  means  for  legitimate  ends."  (Hepburn 
vs.  Griswold,  8  "Wallace,  603;  Legal  Tender  Cases,  12  Wallace, 
457.)  The  question,  however,  was  one  of  great  exigency  like  the 
events  which  raised  it,  and  should  never  have  been  permitted  to 
come  to  an  issue  if  these  notes,  after  they  had  served  their  legiti- 
mate purpose,  had  been  funded  and  retired  as  the  law  tmder 
which  they  were  issued  intended  they  should  be.  The  act  of 
April  12,  1866,  in  this  spirit  and  in  this  view  of  the  law,  provided 
for  their  retirement  at  the  rate  of  about  $50,000,000  a  year.  The 
act  of  February  4,  1868,  however,  suspended  the  operation  of  the 
act  of  1866,  and  the  question  got  into  politics,  and  the  Democratic 
party,  which  had  always  stood  by  gold  and  silver  as  the  only  con- 
stitutional money,  solemnly  declared  in  its  national  platform  of 
1868  that— 

Where  the  obligations  of  the  Government  do  not  expressly  state  upon  their 
face,  or  the  law  under  which  they  were  issued  does  not  provide  that  they 
shall  be  paid  in  coin,  they  ought  in  right  and  justice  to  be  paid  in  the  lawful 
money  of  the  United  States. 

The  Republican  party,  led  in  the  memorable  campaign  of  that 
year  by  the  gi'eatest  soldier  of  the  Republic,  declared  in  their  plat- 
form that  all  the  obligations  of  the  Government  should  be  paid  in 
coin,  and  made  a  square  and  unmistakable  issue  against  the  un- 
Democratic  theory  that  paper  was  the  money  of  the  contract. 

The  result  was  an  overwhelming  triumph  for  the  preservation 
1743 


of  the  public  f  aitli  and  the  credit  of  the  Grovernment  of  the  United 
States  in  the  election  of  G-eneral  G-rant,  who  was  inaugurated 
on  March  4,  1869,  and  immediately  convened  Congress,  which  in 
just  a  fortnight  passed  the  law  of  March  18, 1869,  which  "  declared 
that  all  United  States  notes,  etc.,  should  be  paid  in  coin  or  its 
equivalent,"  and  that — 

The  United  States  also  solemnly  pledged  its  faith  to  make  provision  at 
the  earliest  practicable  period  for  the  redemption  of  the  United  States  notes 
in  coin. 

This  statute  crystallized  into  law  the  overwhelming  verdict  of 
the  people  at  the  polls  and  further  declared  for  the  policy  of 
speedy  redemption  of  the  notes,  which  should  long  ago  have  ceased 
to  vex  the  finances  and  breed  a  brood  of  false  notions  on  the  great 
subject  of  the  people's  money.  In  1870  the  vast  debt  of  the  coun- 
try was  funded  into  new  bonds,  but  not  until  five  years  later,  in 
the  act  of  January  14,  1875,  was  the  earliest  practicable  period 
found  for  providing  for  the  redemption  of  these  notes.  By  the  act 
referred  to  it  was  resolved  that  aU  greenbacks  over  $300,000,000 
should  be  redeemed  in  the  ratio  of  80  per  cent  of  national-bank 
circulation  issued,  and  that  after  January  1,  1879,  the  Secretary 
of  the  Treasury  should  redeem  all  greenbacks  in  coin  and  sell 
bonds  for  that  purpose. 

This  policy  was  not  only  in  accord  with  the  general  sentiment 
of  the  nation  then  dominated  by  men  of  sound  views  on  finances 
but  the  Democratic  national  i^latform  of  the  next  year,  1876,  on 
which  the  Democratic  party  won  its  first  signal  triumph  for  twenty 
years,  declares: 

We  denounce  the  failure  (of  the  Republican  party)  for  all  these  eleven 
years  of  peace  to  make  good  the  promise  of  the  legal-tender  notes  which  are 
a  changing  standard  of  value  in  the  hands  of  the  people,  and  the  nonpayment 
of  which  is  a  disregard  of  the  plighted  faith  of  the  nation. 

This  was  the  declaration  of  a  convention  composed  of  more  dis- 
tinguished Democrats  of  this  country  than  any  which  has  ever 
been  held.  The  Democratic  party,  thus  led  and  counseled,  planted 
itself  again  on  the  teachings  of  Jefferson  and  the  founders  of  the 
Government  and  of  the  party,  and  maintained  that  the  greenbacks 
should  not  have  been  permitted  to  exist  beyond  the  close  of  the  war, 
and  that  the  failure  to  return  them  was  a  disregard  of  the  plighted 
faith  of  the  nation. 

1742 


8 

Why  was  this  solemn  pledge  not  redeemed?  Perhaps  the  stu- 
pendous fraud  by  which  the  verdict  of  the  people  in  that  historic 
contest  was  utterly  ignored  and  defied,  and  by  which  Mr.  Hayes, 
on  ]March  4,  1877,  was  given  the  place  to  which  Mr.  Tilden  was 
clearly  chosen,  demoralized  the  sterling  sense  of  honesty  and 
honor  and  the  plighted  faith  of  the  people  of  the  nation.  Some 
strange  and  inexplicable  change  certainly  came  over  the  spirit  of 
the  country,  for  within  one  year  Congress  passed  the  act  of  Feb- 
ruary 28,  1878,  and  began  the  coinage  of  fiat  silver  dollars,  and  by 
the  act  of  May  31, 1878,  within  but  two  months  more,  peremptorily 
forbade  the  further  retirement  of  the  legal-tender  paper  money. 

What  a  strange  spectacle  of  inconsistency  or  indecision  of  pur- 
pose or  idiocy  do  these  acts  of  January  14,  1875,  and  May  31, 1878, 
present  standing  side  by  side  as  declarations  of  the  wisdom  and 
courage  of  the  greatest  legislative  body  in  the  world. 

The  act  of  1875  commands  the  Secretary  of  the  Treasury  to  sell 
bonds  bearing  interest  and  buy  gold  and  redeem  and  cancel  the 
greenback  circulation. 

The  act  of  1878,  permitting  the  command  to  sell  bonds  and  buy 
gold  and  redeem  these  notes  to  stand,  orders  the  Secretary  of  the 
Treasury  to  stop  canceling  and  reissue  them  as  fast  as  received. 

The  act  of  1878  compels  the  Secretary  to  knock  the  bottom  out 
of  the  water  bucket.  The  act  of  1875  compels  him  to  keep  pour- 
ing in  with  the  hope  of  getting  it  full.  The  one  act  compels  him 
to  laboriously  roll  the  stone  up  the  hill;  the  other  compels  him  to 
let  it  roll  down  again,  and  so  continue  on  from  year  to  year  a  labor 
like  unto  that  of  the  fabled  Sisyphus. 

What  child's  play  under  the  name  of  statesmanship!  Why  did 
not  Congress  then,  and  why  does  it  not  now,  do  one  thing  or  the 
other?  If  greenbacks  are  money  and  perform  properly  all  the 
functions  of  money  and  do  not  need  to  be  redeemed,  why  not  re- 
peal the  act  of  1875  and  save  the  sale  of  bonds  and  purchase  of 
gold?  If  these  promises  to  pay  are  not  money,  why,  after  having 
paid  them,  shall  they  be  issued  again  and  again  to  break  the  Treas- 
ury and  the  taxpayers  on  the  ever-revolving  wheel  of  a  financial 
Ixion?  The  whole  issue  which  confronts  us  to-day  and  threatens 
disaster,  and  perhaps  disgrace,  to  the  nation  arises  from  the  fact 

1742 


9 

that  the  intelligent  people  of  this  country  and  of  the  world  want 
a  substantial  redemption  of  some  of  the  promises  made  on  this 
subject  and  reiterated  again  and  again  for  a  quarter  of  a  century. 

Why  should  not  the  most  loyal  friends  of  the  Government  dis- 
trust the  situation? 

On  January  1,  1895,  there  were  outstanding  of  these  greenback 
notes  not  bearing  interest  and  resting  solely  on  the  credit  of  the 
United  States  the  sum  of  $346,681,016.  They  are  fiat  money — ^mere 
promises  to  pay  and  thirty  years  overdue.  On  the  same  date  there 
were  $422,426,749  of  silver  dollars,  $77,155,722  of  subsidiary  silver 
coin,  and  $150,823,731  of  Sherman  notes,  aggregating  $650,406,202 
of  additional  promises  to  pay  by  the  Government  written  on  silver, 
which  is  worth  in  the  markets  of  the  world  certainly  not  more 
than  one-half  its  certified  value.  The  one-half  of  this  amount 
($325,202,201)  must  therefore  be  added  to  the  fiat  money  and  non- 
interest-bearing  debt  of  the  Government,  for  it  too  rests  solely  on 
the  credit  of  the  United  States,  and  with  the  greenbacks  reaches 
the  enormous  aggregate  of  $671,884,117. 

On  the  same  date,  January  1,  1895,  the  bonded  interest-bearing 
debt  of  the  United  States  was  $679,168,130,  without  including,  I 
presume,  about  $65,000,000  of  bonds  issued  to  the  Pacific  rail- 
roads. In  all,  therefore,  we  owe  over  $1,400,000,000,  for  the  re- 
demption of  which  we  have  certainly  not  over  $100,000,000  of 
gold.  Is  it  any  wonder  gold  is  seeking  a  refuge  from  our  legisla- 
tion abroad,  and  that  people  everywhere  are  afraid  to  invest? 
Will  this  bill  relieve  the  situation?  No  one  pretends  that  it  will. 
Mr.  Carlisle,  in  his  statement  before  the  Currency  Committee,  at 
page  54,  says: 

I  do  not  see  the  immediate  prospect  of  the  Treasury  Department  being  in  a 
position  which  will  enable  it  to  avoid  the  issue  of  bonds.  I  am  sorry  to  say  it, 
but  that  is  the  actual  condition,  provided  we  are  to  continue  the  redemption  of 
these  notes  in  gold,  not  in  silver,  and  maintain  the  parity  of  the  two  metals. 

Every  financier  called  before  the  committee  concurred  in  sub- 
stantially the  same  result  to  be  expected  from  the  pending  meas- 
ure.    Mr.  Eckels,  in  his  statement,  at  page  61,  says: 

Undoubtedly  the  manly  thing  to  do,  and  the  thing  that  ought  long  since  to 
have  been  done,  would  be  the  redemption  and  canceling  of  these  notes  in  ac- 
cordance with  what  was  designed  at  the  time  of  the  enactment  of  the  legal- 
tender  act,  followed  by  the  authority  given  to  Secretary  McCulloch,  but 
which  was  afterwards  repealed. 
1742 -2 


10 

The  only  plea  which  I  desire  to  make  in  this  debate  is  to  do 
what  Comi)troller  Eckels  declares  is  undoubtedly  the  only  manly 
thing  to  be  done.  Why  not  do  what  is  manifestly  not  only  the 
manly  thing,  but  what  is  honest  and  just  and  patriotic  and  due 
to  the  plighted  faith  and  honor  and  good  repute  of  this  great  Gov- 
ernment? Why  not  issue  such  bonds  as  are  proposed  by  the 
amendment  which  I  have  offered,  bearing  a  low  rate  of  interest  and 
redeemable  almost  at  the  pleasure  of  the  Government,  and  stop  the 
inexorable  necessity  of  issuing  them  under  an  old  law  at  a  higher 
rate  and  to  the  confusion  of  the  purchaser  and  at  the  cost  of  the 
people.  Such  action  will  restore  confidence,  and  be  one  great  step 
in  securing  the  parity  of  our  money  and  bringing  it  back  to  the 
channels  of  trade.  Such  an  addition  to  the  measure  now  before  the 
House  will  give  some  assurance  of  its  achieving  the  purpose  for 
which  it  is  designed. 

The  Government  has  no  right  to  engage  in  banking;  neither 
has  it  any  right  to  pledge  its  credit  to  secure  the  currency  issued 
by  private  corporations  organized  for  the  profit  of  the  parties  who 
control  them.  The  country  needs  banks,  however,  and  the  exi- 
gencies of  the  great  war,  which  settled  forever  that  we  are  a  nation 
and  not  a  confederacy,  wiped  out  the  old  system  of  banks  char- 
tered by  the  States,  and  gave  us  in  its  stead  a  sound  and  satisfac- 
tory national  system,  which  can  be  readily  revised  and  extended 
and  encouraged,  so  that  its  branches  may  reach  out  over  the  whole 
land  where  the  property  and  business  of  the  people  require  banks. 

But  after  you  have  redeemed  your  promises  to  pay  and  settled 
your  system  of  currency,  if  you  would  insure  the  return  of  public 
confidence  and  prosperous  times,  you  must  reduce  your  public  ex- 
penditures to  the  amount  of  your  reventie  or  increase  your  revenue 
so  as  to  promptly  pay  every  obligation  of  the  Government  as  it 
matures.  Governments  can  only  be  successfully  maintained  by 
money.  They  starve  on  theories,  or  grow  attenuated  and  unstable 
and  unhappy  like  theorists  themselves. 

The  measure,  therefore,  which  would  relieve  the  whole  situation 
should  provide  for  three  things: 

First.  The  redemption  and  retirement  of  the  legal-tender  notes 
in  conformity  with  the  law  under  which  they  were  issued  and  in 
keeping  with  the  plighted  faith  of  the  nation. 

1742 


11 

Second.  That  the  bonds  of  the  Government  issued  for  the  re- 
demption of  the  greenbacks  shall  be  the  basis  of  national-bank 
circulation  to  their  full  amount,  and  that  the  taxes  on  such  banks 
shall  be  so  reduced  as  to  encourage  their  establishment  in  such 
numbers  as  to  supply  an  abundant  currency  in  place  of  that 
retired. 

Third.  The  collection  of  sufficient  revenue  to  pay  the  expenses 
of  the  Government,  economically  administered,  remembering 
always  that  a  surplus  is  vastly  better  than  a  deficit  in  maintaining 
the  public  credit  and  securing  satisfactory  administration. 

1742 


12 


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1742 


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1742 


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Gold 
Silve 
Certi 
Trea 

14 


Situation  of  the  principal  banks  of  issne  of  various  countries  on  September  .W, 

ISOS. 


Names  of  banks. 

Metallic  re- 
serve. 

Analysis  of  the  re- 
serve. 

Bills  pay- 
able to 

bearer  in 
circula- 
tion. 

Gold. 

Silver. 

Imperial  Bank  of  Germany 

$178,177,600 

107,193,300 

19,087,700 

1,698,400 

14, 378,  .500 

68,804,511-) 

4, 940, 8(  HI 

573,495,9(K) 

424,000 

.50, 180,  (m 
36,.57:!,.5(K) 

6,79:),()(KJ 
45,]8l,:)(K) 

8,78l,r)(HJ 
11,811,600 

13:3,015,600 
3:!,449,,5(X) 
l;},9.5:i,!H)0 

301,(H)0,700 
2,47O,4(J0 

5,404,000 

4,,574,1(X) 

16,530,800 

75, 945,  .500 

$365,64.5,300 

Bank  of  Austria-Hungary 

$11,533,606  j$65,658,600 

200,874,400 
77,O45.(iO0 

National  Bank  of  Bulgaria  (a) 

19:;.  (HX) 

30,.5:i.5.;.'(X) 

Bank  of  Spain      . 

38,194,700 

4,188,1(X) 

327,289,400 

30,609,8(X) 

753,700 

245,306,5aj 

177,53],4(X) 

Bank  of  Finland 

8, 607, 8(X) 

Bank  of  France           

669,385,4<X) 

23,3:30,1(J0 

Italy: 

4.5,490,100 
33,057,;300 

4,689,900 
4,516,300 

110, 589,  (XX) 

Other  institutions  of  issue. 

86,406,100 
1:3,046,800 

Bank  of  th.-  Netherlands 

11,464,300 
3, 41,3,  .51 K) 
11,783,300 

133,01.5,600 

33,967,000 

11,8:30,900 

397,79!J,000 

1,679,100 

4, 477, 600 
3,(X)7,3(KJ 
1:3,664,400 

:3;3,7]7,1(X) 

6,:5ti9,(KH) 

19,300 

76,:313,300 
55,641,fXX) 

Bank  of  Rouniania  

37, 435, 3(X) 

United  Kingdom: 

Bank  of  England 

124, 833, 400 

Banks  of  Scotland  (b) 

Banks  of  Ireland  (6) 

Imperial  Bank  of  Russia 

Bank  of  Servia 

19,782,500 

3,133,fXX) 

3,361, 7(XI 

791,300 

936,400 
2,566,9(X) 
3,856,400 

14,011,8(X) 

39,;374,600 

783,773,0(X) 

5,  .577, 700 

Sweden: 

Royal  Bank  (c)    

11,676,500 

1.5,1]J,9(X) 
33,771,400 

13,134,000 

a  Situation  on  Sept.  7.       b  Situation  on  July  15.        c  Situation  on  Aug.  31. 
Aniitial  averages  of  the  rate  of  discount  in  Europe,  18S5~lSf)2. 
[From  the  Bulletin  de  Statistique,  January,  1893,  page  60.] 


Principal 

Years. 

cities. 

1885. 

1886. 

1887. 

1888. 

1889. 

1890. 

1891. 

1892. 

Amsterdam . . . 

Berlin 

Brussels 

London 

Paris             

Per  ct. 

3.71 
4.14 
3.33 
3.91 
3.  (JO 

Per  ct. 

3.50 
3.39 
3.75 
3,04 
3.00 

Per  ct. 

3.50 
3.40 
3.06 
3.38 
3.00 
5.50 
5.05 
4.12 

Per  ct. 

2.70 
3.:33 
3.37 
3.:30 
3.10 
5.50 
5.34 
4.16 

Per  ct. 
2.50 
3.68 
3.54 
3..5(i 
3.10 
5.33 
5.75 
4.19 

Per  ct. 
2.80 
4.38 
3.30 
4.55 
3.09 
6.00 
5.85 
4.52 

Per  ct. 
3.13 

3.80 
3.00 
3.35 
3.00 
5.78 
4.88 
4.40 

Per  ct. 
2.70 
3.20 
2.70 
2.54 
2.66 

5.20 

St. Petersburg. 

4.8S 

Vienna  .-. 

4,04 

4.00 

4.03 

The  wealth  and  debt  of  nations 


Countries. 


Wealth. 


Debt  of  all  kinds. 


Unit?d  States - 

England  or  Great  Britain 

France 

Germany... 

Russia 

Austria. 

Italy 

1742 


S60.47.5,0(X).(HKI 
4:3.Ci(HI,IK)(l.(KXI 
40,:«HI.(HK1.(HK) 
31,li(IO.IKKI.(KH) 
21,7]5.(KI().(H)(I 
18,0i;5,  ()(KI.II(IO 
11, 7.5;),  (XX),  000 


$1,400,0(X).000 
5, 695, 6.59.  (HH) 
4,893,8K).(I00 
3,695.:it;5.(KX) 
4,869.7ti8.(XI0 
2,  (U:.'.  031,  (XX) 
2,35(J,(XXI,000 


15 


The  wealth  and  dabt  of  nations — Continued. 


Countries. 


Spain 

iTetherlands , 

Belgium 

Sweden 

Canada 

Mexico 

Australia 

Portugal. 

Denmark--- 

Argentine  Republic 

Switzerland 

Norway 

Greece 

Turkey 

Chile 

Colombia,  United  States  of 

Peru 

Uruguay 

Venezuela 

Egypt 

All  other  countries 

Total  of  the  world  . . . 


Wealth. 


$7,965,000,000 
4,935,000,000 
4, 080,  (KX),  000 
3,475.00(),0()0 
3,250,000,000 
3,150,000,000 
2,950,000,000 
1,855,000,000 
l,8:i(»,(«Kt,000 
l,G60,000,tKX) 

i,t;2(),(K;io,(X)0 

1,410,(K)0,(XX) 
1,055,000,000 

(t) 

(t) 

(t) 


Debt  of  all  kinds. 


253,685,000,000 


$l,106.a50,000 
518,000,000 
213,00(J.000 
580,000.000 
273,fX)0,000 
110,000,0(X) 

(*) 

593,670,000 
58, 467, 000 

148,IKJ0,000 
65,(X)0.000 
29, 869.  (KJO 
13,625.000 

868.590.000 
92, 850. 000 
15. 000.  (MX) 

343, 634, 000 
79.100,000 
63, 700, 000 

732,000,000 
3,500,000,000 


34,456,574,000 


*  See  debt  of  England. 


tNo  estimate. 


1742 


THE    CURRENCY. 


SPEECH 


HON.  RICHARD  P.  BLAND, 


OF    MISSOURI, 


HOUSE  OF  REPRESENTATIVES 


Tuesday,  January  8,  1895. 


^w^^SHiisr&Toisr, 

1895. 


SPEECH 

OF 

HON.  RICHAED   P.    BLAND. 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8149)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes — 

Mr.  BLAND  said: 

Mr.  Chairman:  I  do  not  know  that  I  shall  undertake  to  occupy 
the  whole  of  the  hour. 

I  want,  in  the  beginning,  to  call  the  attention  of  this  committee 
to  the  fact  that  the  great  issue  involved  in  this  discussion  is 
sought  to  be  obscured.  I  do  not  question  the  motives  of  the  gen- 
tlemen who  reported  this  bill,  but  the  motives  of  that  force  which 
is  behind  it.  I  can  speak  from  long  experience  in  this  House,  from 
what  I  have  seen  in  the  past,  and  nistory  is  repeating  itself.  In 
order  that  we  may  understand  and  the  country  may  understand 
the  issue  here,  it  is  necessary  to  go  back  in  our  history,  and  I 
might  go  back  to  the  days  of  Benton  and  Jackson;  and  the  scenes 
enacted  in  those  times  are  before  us  now,  for  then  the  great  ques- 
tion of  the  Democratic  party,  as  led  by  Benton,  was  between  the 
paper  system,  so  called,  the  national-bank  issues,  and  the  coinage 
of  the  Constitution,  always  the  Democratic  theory  in  this  Gov- 
ernment until  now. 

The  coinage  act  of  1873  that  struck  down  sUver  was  in  the  in- 
terest of  the  very  forces  behind  this  bill;  and  from  the  hour  that 
the  law  of  1878  was  passed  restoring,  only  partially  it  is  true,  the 
money  of  the  Constitution  until  the  present  moment  the  same 
forces  that  are  behind  this  bill  were  at  war  with  that  law.  It  had 
not  been  in  existence  but  a  few  months  until  the  national  bank- 
ing institutions  of  New  York,  composing  the  Clearing  House  As- 
sociation, met,  and  by  agreement  among  themselves  declared  that 
the  despised  coin  of  the  Government  should  not  receive  lodgment 
in  their  vaults.  They  extorted  from  the  Secretary  of  the  Treas- 
ury— and  I  regret  to  say,  in  my  opinion,  a  willing  Secretary  of 
the  Treasury  to  that  extortion — an  agreement  that  in  the  system 
of  clearing-house  settlement  silver  should  be  excluded,  and  that 
war  was  prosecuted  until  Congress  by  amendment  in  rechartering 
the  national  banks  prohibited  it. 

I  say,  Mr.  Chairman,  it  has  been  the  object  of  the  national  banks 

to_  exclude  the  coinage  of  the  country  all  along  so  that  their  notes 

might  take  the  place  of  the  constitutional  money  of  the  people, 

deliberately,  plainly,  remorselessly  excluded,  and  in  all  the  con- 

1748  3 


tests  in  this  House  ever  since,  and  I  think  I  have  been  engaged 
in  tliem  all,  the  war  has  hinged  on  this  point,  the  point  w^hich 
is  before  us  to-day.  Disguise  it  as  you  w^ill ,  appeal  to  the  country 
as  you  may  with  the  idea  of  re\'i\ing  prosperity,  there  is  nothing 
in  it  but  tiie  same  old  cry.  The  power  of  the  banking  corpora- 
tions in  this  country  which  seizes  on  all  the  laws  of  the  land  to 
rule  out  the  money  of  the  Constitution  in  order  that  their  credit 
notes  may  be  forced  into  circulation — that  is  the  issue,  there  is 
no  question  about  that.  But  it  is  said  that  we  are  unable  to  settle 
it  now.  Notwithstanding  that  party  to  which  I  belong  promised 
in  its  platform  to  settle  it  on  the  lines  of  bimetallism,  it  remains 
unsettled. 

Democracy,  Mr.  Chairman,  is  on  trial;  on  trial  among  the  mem- 
bers of  this  House  it  may  be,  but  beyond  it  with  that  great  mass 
of  voters  in  this  country  who  are  looking  on.  They  are  not  idle 
spectators  of  this  scene.  They  want  to  know  if  Representatives 
sent  here  for  a  purpose,  on  a  platform  that  demanded  a  policy,  are 
to  be  recreant  to  every  promise  made,  are  to  surrernier  to  the  be- 
hest of  the  money  power  of  this  country,  and  instead  of  can'jdng 
out  that  binietallic  platform  as  promised;  if  we  are  to  abandon  it 
and  take  u])  the  old  Federalism  perpetuated  by  my  friends  on 
the  other  side,  this  national  banking  system,  amplified  and  ex- 
tended, so  tliat  it  may  ramify  and  drive  out  the  legal-tender  money 
of  this  country,  in  order  to  force  into  circulation  theii*  private 
notes  in  one  sense,  notes  wliich  are  not  a  legal  tender  for  private 
debts,  to  take  from  the  debtor  all  means  of  satisfying  a  judgment, 
for  the  bank  note  will  not  answer  that  purpose — whether  they 
shall  be  allowed  to  cover  up  the  legal-tender  money  of  this  country 
and  destroy  it,  in  order  to  force  into  circulation  money  that  is  not 
a  legal  tender,  not  in  the  interest  of  debtors,  but  simply  that  the 
creditor  may  dictate  the  terms  and  conditions  in  which  he  shall 
be  paid. 

Why,  Mr.  Chairman,  we  remember  that  in  the  rechartering  of 
the  national  banks  Randall,  the  great  leader  of  the  Democratic 
party  at  that  time,  denounced  this  national  banking  •system. 
The  present  Secretary  of  the  Treasury,  Mr.  Carlisle,  denounced 
it,  and  nearly  every  Democrat  UT)on  this  side  of  the  House  who 
spoke  iipon  the  subject  denounced  it  as  undemocratic. 

Why,  the  present  Secretary  of  the  Treasury,  in  his  speech  made 
at  that  time,  which  has  been  quoted  here  by  the  gentleman  from 
Texas  [Mr.  Bell]  ,  depicted  more  eloquently  than  I  possibly  could 
the  power  of  these  banks  to  expand  the  currency  for  their  own 
purposes,  and  again  to  contract  it.  He  instanced  in  that  speech 
where  they  had,  in  a  few  short  days,  contracted  the  currency 
nearly  $20,000,000  for  the  purpose  of  extorting  a  Presidential  veto 
of  a  bill;  and  the  honorable  Secretary  of  the  Treasury,  in  his  re- 
port, undertakes  now  to  make  the  excuse  that  these  bankers  mis- 
understood the  bill  that  they  were  fighting.  The  speech  that  he 
made  during  the  time  was  a  part  of  the  res  gestae.  He  knew  bet- 
ter then  what  they  meant  than  he  does  now. 

Now,  Mr.  Chairman,  coming  down  along  a  little  later,  we  re- 
member that  this  Congress  was  summoned  from  our  residences 
in  extra  session,  to  do  what?  To  legislate  upon  the  currency 
question.  There  was  nothing  then  said  about  banks.  Oh,  no. 
We  were  told  in  the  proclamation  calling  Congress  together  that 
1748 


the  only  law  upon  the  stattite  book  at  that  time  that  stood  in  the 
way  of  prosperity  to  the  people  of  this  country  was  the  purchas- 
ing clause  of  the  Sherman  law,  and  that  with  that  law  repealed 
prosperity  would  come.  Remember,  that  same  raid  had  been 
made  upon  tne  gold  reserve  then  that  is  made  now.  The  same 
pressure  was  brought  to  bear  to  secure  the  repeal  of  the  purchas- 
ing clause  of  that  law  as  is  enforced  now.  The  same  elements 
'which  were  behind  that  scheme  are  behind  this  scheme.  It  may 
not  suit  all  of  them.  They  may  expect  to  get  something  a  little 
better,  but  the  most  of  them  will  vote  for  this  before  they  get 
through,  if  they  can  not  do  any  better.  They  are  all  for  one  and 
the  same  object. 

In  view  of  the  past,  how  can  we  believe  to-day  the  argument 
and  prophecies  of  those  who  are  behind  this  scheme?  Why,  that 
was  but  a  part  of  a  conspiracy,  Mr.  Chairman.  In  my  speech  at 
that  time  I  predicted  that  that  was  a  conspiracy  and  only  a  part 
of  it,  that  when  that  silver  law  was  repealed  we  should  be  called 
upon  to  reenact  or  rather  to  extend  and  liberalize  the  banking 
system  of  this  country  to  take  the  place  of  silver.  I  made  another 
prediction,  Mr.  Chairman,  that  the  repeal  of  that  law  would  not 
bring  prosperity,  but  would  simply  intensify  the  difficulties  under 
which  we  labored.  And  more  than  that,  Mr.  Chairman,  I  make 
the  prophecy  now  again  that  if  it  were  possible  to  pass  this  bill 
and  put  it  into  operation  in  a  short  time  your  greenbacks  would 
disappear,  and  in  order  to  make  the  gold  standard  secure  you 
would  be  asked  to  eliminate  all  the  silver  that  is  now  in  circula- 
tion. 

Progress  after  progress,  scheme  after  scheme,  all  looking  and 
reaching  in  one  direction,  and  one  only,  and  that  is  for  the  repre- 
sentatives of  the  people  to  surrender  to  banking  monopolies  the 
power  to  control  the  volume  of  money  in  this  country. 

My  friend  from  Ohio  [Mr.  Johnson]  insisted  that  the  question 
of  coinage  was  not  before  us.  Aye,  indeed,  we  try  to  obscure 
that  question,  but  this  scheme  is  thrown  in  here  for  that  purpose. 
No  matter  whether  the  bill  passes  or  not,  it  has  mystified,  di- 
verted, drawn  the  attention  of  the  people  of  this  country  from  the 
only  thing  which,  in  my  opinion,  can  possibly  afford  relief,  divid- 
ing their  forces. 

Why,  Mr.  Chairman,  what  ought  this  Congress  to  do?  They 
say  we  can  not  accomplish  it,  but  what  ought  it  to  do?  How  are 
you  going  to  revive  the  languishing  industries  of  this  countrj-? 
Why,  the  very  advocates  of  this  bill  themselves  claim  that  there 
is  more  money  now  than  can  be  used.  If  that  be  ti'ue,  and  ad- 
mitting all  that  is  contended  for  this  bill,  that  it  will  augment 
that  volume,  what  does  it  mean?  There  naust  be  somewhere  a 
starting  place  to  revive  the  industries  of  this  country.  Let  us 
commence  where  we  left  off. 

Why,  sir,  west  of  the  Mississippi  River,  in  all  that  vast  region 
of  country,  constituting  more  than  half,  nearly  two-thirds,  of  the 
territory  of  this  great  Union,  hundreds  of  thousands  of  people  were 
engaged  in  mining  operations  and  all  other  industries  depending 
upon  their  success.  By  the  hand  of  demonetization  we  struck 
down  these  indiistries.  Where  the  mines  had  employed  its  hun- 
dreds and  thousands  of  laborers — these  laborers  giving  a  market 
for  the  product  of  the  shop  and  the  farm — the  army  that  under- 
1718 


6 

took  to  march  upon  this  capital  last  winter  in  hunger  and  des- 
peration came  from  these  regions  mostly. 

Now,  sir,  if  we  do  but  conform  our  legislation  to  the  demands 
of  the  organic  law  of  the  land,  to  the  practice  of  the  fathers  and 
restore  silver,  we  shall  immediately  restore  prosperity  to  our 
great  mining  region.  The  wheel  of  prosperity  will  be  set  in  mo- 
tion, and  it  will  react  upon  all  other  industries. 

All  that  is  necessary  is  to  begin  a  revival  of  business  some- 
where. When  once  the  clog  is  removed  at  any  point  the  whole 
machine  will  begin  to  work. 

A  bank  note  does  not  imply  labor  in  its  production.  It  can  not 
go  into  circiilation  until  a  revival  of  business  calls  it  out.  But 
metallic  money  gives  employment  to  labor  to  extract  it  from  the 
mines.  It  is  said  here  we  want  a  flexible  currency.  A  bank  note 
is  not  flexible  currency  in  the  true  sense  of  flexible  money.  It  is 
flexible,  usually  as  the  issuer  sees  proper  for  his  own  advantage 
to  expand  or  contract  it. 

It  is  contracted  or  inflated  at  the  will  and  for  the  benefit  of  the 
bankers,  and  not  for  the  interest  of  the  public. 

On  the  other  hand,  metallic  money  is  flexible  in  the  true  mone- 
tary sense. 

If  prices  are  low  the  cost  of  mining  will  not  be  great.  A  poor 
mine  will  pay  to  work  it.  So,  then,  the  mines,  rich  or  poor,  will 
be  operated.  The  increased  output  of  money  thus  brought  about 
will  cause  prices  to  rise,  and  as  prices  go  up  one  after  another  of 
the  poor  mines  close  down  and  the  closing  of  the  mines  will  natu- 
rally control  the  amount  of  money  in  circulation  and  cause  prices 
to  fall  until  the  poorer  mines  can  again  be  put  to  use. 

So  that  naturally  tliere  can  be  no  great  or  sudden  inflation  or 
contraction,  but  a  steady  and  uniform  value  maintained  in  our 
currency. 

This  is  esjwcially  so  in  silver  mining. 

Silver  is  usually  foiand  in  ore  deposits  that  are  not  easily  ex- 
hausted like  gold  washings.  The  output  of  silver  is  more  lasting 
and  uniform  in  amount. 

But  we  are  taimted  with  the  argument  that  the  bullion  in  the 
silver  dollar  is  worth  but  50  cents. 

Should  the  silver  dollar  be  melted  dowTi  its  monetary  function  is 
destroyed;  its  money  value  gone.  The  bullion  has  only  the  com- 
modity value  found  in  the  arts,  but,  if  we  had  the  right  of  free 
coinage,  the  bullion  in  the  dollar  thus  melted  down  could  be  taken 
to  the  mint  and  coined  again  into  a  dollar.  In  that  case  the  bul- 
lion would  be  worth  a  dollar,  same  as  the  coin.  Its  monetary 
function  thus  restored,  it  no  longer  depends  on  the  slow  demand 
of  the  arts,  but  it  now  has  a  new  value;  it  is  money  and  every- 
body wants  it. 

We  have  near  seventy  millions  of  people  all  demanding  it;  all 
eager  to  become  possessed  of  it.  Sixty  billions  of  products  are 
ready  to  be  exchangetl  for  it.  It  is  this  ever-present,  insatiable 
ilemand  for  it  tliat  maintains  its  value  without  any  gold  redemp- 
tion. In  fact,  the  whole  world  demands  our  silver  dollar  at  its 
fuU  value  in  gold  for  the  simi)le  reason  that  the  world  can  buy 
all  our  property  and  employ  all  our  labor  with  it.  It  is  as  good 
as  gold  anywhere  less  the  cost  of  transportation  to  oiir  counti'y. 
Paper  can  be  overissued  because  there  is  no  limit  whatever  to 
1718 


the  manufacture  or  production  of  paper.  Nature  has  set  its  seal 
of  limitation  on  the  production  of  sUver.  It  never  has  and 
never  can  be  produced  in  quantities  to  cause  undue  inflation  of 
the  money  volume. 

The  free  coinage  of  silver  here  would  naturally  give  ua  the  trade 
of  all  silver-using  countries — India,  China,  Japan,  Mexico,  and 
the  South  American  States.  On  the  silver  standard  these  nations 
constitute,  with  our  own,  more  than  two- thirds  of  the  people  of 
the  world.  We  would  drive  western  Europe  to  bimetallism. 
The  single  gold  standard  nations  would  find  their  commerce 
walled  in.  They  would  be  compelled  to  go  to  bimetallism  or  de- 
struction. 

I  intend  to  offer  an  amendment  to  this  bill  putting  this  country 
back  upon  that  old  system  of  bimetallic  coinage,  vsdth  the  right  to 
deposit  gold  or  silver  and  to  receive  for  it  coin  notes  to  be  legal 
tender,  the  notes  to  be  redeemed  either  in  gold  or  silver  at  the  op- 
tion of  the  Government,  but  compelling  the  Secretary  of  the  Treas- 
ury to  use  that  metal  which  is  most  convenient  to  the  Government 
at  the  time,  and  redeem  Treasury  notes  in  the  same  way.  If  we 
could  put  silver  dollars  behind  the  greenback  there  would  be  no 
necessity  of  enacting  this  law  for  the  protection  of  the  public 
Treasury.  Mr.  Chairman,  if  this  Government  saw  proper  to  do 
it,  if  this  Congress  would  insist  upon  the  restoration  of  the  old 
Democratic  system,  there  is  no  difficulty  on  earth  of  utilizing  all 
the  silver  that  could  possibly  come  here,  and  at  a  parity  with  gold, 
and  that  would  give  enough  to  supply  the  channels  of  circulation. 

But,  Mr.  Chairman,  what  about  this  bill?  I  want  to  address 
myself,  in  the  first  place,  to  those  gentlemen  who  seem  to  think 
that  they  are  going  to  get  State  banks  under  this  scheme,  and  the 
State  banks  to  be  organized  as  quasi-national  banks,  and  under 
the  control  of  Congi-ess  in  many  respects.  One  of  the  distinctions 
between  them  is  that  the  State-bank  note  will  have  no  legal-tender 
power  and  can  not  be  forced  into  circulation,  while  the  national 
banks  that  are  organized  under  it  will  have  power  to  issue  notes 
which  are  accepted  by  the  Government  for  Government  dues  and 
for  the  payment  of  all  Government  demands  except  customs  duties. 

That  is  not  divorcing  the  Government  and  the  Treasury  from 
banking.  The  Government  is  compelled  to  take  every  bank  note 
issued;  it  stands  behind  the  note  and  the  note  holder  all  along  the 
line,  and  every  man  who  takes  the  note  takes  it  with  the  understand- 
ing that  he  can  pay  it  out  to  the  Government,  and  that  the  Gov- 
ernment can  pay  it  out  again  on  its  debts  with  certain  exceptions. 
Now,  organize  your  State  bank  under  this  bill,  in  any  Southern  or 
Western  town  and  set  a  national  bank  by  the  side  of  it,  and  which 
will  survive?  Will  it  be  the  bank  which  issues  a  note  that  the 
Government  is  behind,  which  the  Government  guarantees  shall 
at  all  times  be  good,  which  is  receivable  for  the  public  dues,  or 
will  it  be  the  State  bank,  which  issues  a  note  that  is  entirely  de- 
pendent upon  the  bank  itself  for  its  credit  and  its  life?  I  need 
not  say  that  everyone  dealing  with  a  bank  and  desiring  bank  notes 
would  go  to  the  national  bank  to  get  them,  and  the  State  bank 
could  not  survive  under  that  system. 

We  have  seen  the  operation  of  the  national  banks,  we  have  seen 
them  using  all  their  power  to  drive  out  all  money  except  their 
own  in  order  to  make  room  for  their  circulation,  and  that  expe- 
1748 


lit'iu-e  teaches  iis  that  there  would  grow  up  immediately  a  feeling 
of  rivalry  and  hostility  between  the  national  banks  and  the  State 
banks.  The  national  bank  would  shave  every  State-bank  note 
that  was  issued,  even  in  the  same  toAvn.  In  short,  the  idea  of 
State  banks  under  this  bill  is  preposterous.  That  feature  of  the 
bill  is  only  intended  as  a  sort  of  bridge  for  gentlemen  who  are  in 
favor  of  State  banks  to  walk  across  into  the  net  of  the  national 
banking  scheme,  and  I  am  astonished  that  gentlemen  will  be 
caught  in  such  a  flimsy  net  as  that. 

The  dual  system  proposed  by  this  bill  can  not  exist.  One  or  the 
other  must  succumb. 

The  national  banks  are  now  dying  out  because  of  the  high  pre- 
mium on  bonds,  and  the  payment  of  the  bonded  debt  is  undermin- 
ing them. 

Let  them  die.  Do  not  give  them  new  life  and  the  extraordinary 
advantages  proposed  by  this  bill.  We  undertake  by  this  bill  to 
lock  up  all  the  legal-tender  money  except  the  silver  and  gold  that 
we  have.  Gold  is  already  locked  up  in  the  vaults  of  the  national 
lianks  and  is  being  exported.  Practically  all  the  legal-tender 
money  is  to  be  locked  up  and  taken  from  circulation  by  the  oper- 
ation of  this  bill,  leaving  nothing  but  the  few  grains  of  gold  that 
we  may  be  able  to  hold  in  the  Treasury  by  selling  bonds,  or  in 
some  other  way  that  I  can  not  conceive  of  now,  and  a  small  amount 
of  silver.  One  of  the  gentlemen  who  discussed  this  question  before 
the  CJommittee  on  Banking  and  Currency  says  that  gold  is  hard  to 
get.    His  language  is: 

The  question  of  ultimate  redemption  in  gold  is  becoming  more  and  more  a 
serious  question,  for  the  demand  for  gold  is  constantly  increasing,  and  it  is 
harder  and  harder  to  get. 

That  is  the  statement  of  Mr.  Walker,  of  the  committee. 
Another  witness,  Mr.  Rothwell,  testified  as  follows: 

Mr.  Walker.  I  understand,  then,  that  you  come  to  this  conclusion:  That 
the  effect  of  Mr.  Carlisle's  scheme,  if  it  works,  would  be  to  force  the  Treas- 
ury notes  and  the  legal-tender  notes  back  on  the  Treasury  for  redemption, 
and  that  it  would  require  the  selling  of  more  and  more  bonds  to  meet  the  de- 
mand. 

Mr.  Rothwell.  It  certainly  will  if  the  bank  notes  can  be  made  equal  in 
value  as  security;  that  is,  if  the  peoijle  would  take  them,  for  it  is  to  the  inter- 
est of  a  bank  to  force  its  own  notes  into  circulation  and  to  send  home  for  re- 
demption the  notes  of  everybody  else,  and  primarily,  the  Government  notes 
would  be  sent  in  for  redemption. 

There  i.s  one  question  I  desire  to  refer  to,  and  that  is  the  ability  to  get  gold 
with  which  to  redeem. 

Mr.  Black.  Let  us  hear  you  on  that. 

Mr.  Rothwell.  I  do  not  think  that  it  would  be  possible  for  the  Govern- 
ment to-day  to  get  enough  gold  to  redeem  all  its  outstanding  notes.  The  de- 
mand for  gold  is  increasmg  all  over  the  world.  Since  the  condition  amount- 
ing to  full  legal-tender  silver  has  been  discontinued,  the  demand  for  gold  has 
gi'own  aud  there  has  been  a  constantly  increasing  demand  for  it.  It  is  true 
that  the  increa-sing  demand  and  the  appreciation  it  has  brought  have  induced 
a  great  many  to  go  into  the  business  or  gold  mining,  and  that  the  production 
of  gold  is  increasing  because  the  value  of  gold  is  gi'eater  than  it  was.  But 
there  is  not  nearly  enough  increase  in  the  production  of  gold,  when  counted 
up  for  a  long  time,  to  compensate  for  the  destruction  of  so  much  of  the 
money  as  was  represented  by  silver  when  there  was  a  concurrent  use  of  silver 
and  gold. 

On  the  question  of  the  ultimate  redemption  of  our  Government  obliga- 
tions, our  paper,  our  notes,  as  to  what  can  be  paid,  if  we  go  to  work  to  in- 
<T.-ase  this  demand,  that  has  ab'eady  apiireciated  the  value  of  gold,  by  ask- 
ing; for  two  or  three  hundred  millions  more  of  it,  there  is  no  saying  where  the 
value  of  gold  will  go  to.  That  means  that  everything  else  which  is  now 
-'.leasured  Dy  gold  as  a  sole  standard  will  depreciate,  and  you  can  have  no 
general  prosperity  on  a  constantly  falling  market. 
1748 


Now,  admitting,  according  to  this  statement,  that  you  are  to 
increase  the  paper  demand  for  redemption  in  gold,  here  is  an  in- 
telligent witness  who  insists  that  the  demand  for  gold  will  become 
greater,  and  that  prices  will  depreciate  instead  of  inci'easing.  In 
other  words,  he  shows  the  folly  of  vindertaking  to  raise  prices  by 
introducing  credit  money,  unless  at  the  same  time  you  make  some 
provision  for  money  of  ultimate  redemption  to  correspond  with 
the  increased  credit  money.  You  can  do  it  for  a  short  period,  but 
the  reaction,  the  collapse,  will  come,  and  will  bring  panic  and  ca- 
lamity upon  the  country.  Hence  it  is  that,  admitting  that  this  bill 
will  increase  credit  money,  here  is  an  intelligent  witness  who 
shows  you  that  there  is  not  gold  enough  on  which  to  issue  it.  Mr. 
Rothwell  is  a  bimetallist  of  the  international  school. 

Take  another  witness  whose  testimony  is  contained  in  these 
hearings.  I  will  not  consume  time  now  in  reading  it,  but  I  will 
incorporate  it  in  my  remarks.  I  refer  to  Mr.  Butler,  a  banker  of 
Connecticut,  a  very  intelligent  gentleman  who  seems  to  have  a 
full  comprehension  of  the  situation.  What  does  he  say?  Why 
he  admits,  Mr.  Chairman,  the  whole  proposition  which  is  insisted 
upon  by  those  who  urge  the  free  coinage  of  silver  as  adding  to  our 
fund  of  ultimate  redemption,  that  the  effect  of  that  would  be  to 
increase  the  value  of  real  estate,  of  personal  property,  and  of  all 
property  except  bonds  and  mortgages.  He  admits  that  before  the 
election  of  last  fall  he  had  made  arrangements  to  invest  his  bonds 
and  mortgages  and  money  in  real  estate,  thinking  it  possible  that 
the  election  would  result  in  a  free-silver  Congress.  But  he  goes  on 
to  say  that  after  the  elections  he  concluded  it  was  not  to  be  a  free- 
silver  Congress,  and  therefore  he  abandoned  his  idea  of  making 
these  reinvestments.  Mr.  Chairman,  I  do  not  know  how  the  next 
Congress  may  be  in  that  respect.  Our  Republican  friends  have 
never,  as  a  party,  been  the  friends  of  silver,  and  I  do  not  believe 
that  we  shall  get  beneficial  silver  legislation  in  the  next  Congress. 
It  does  not  seem  possible  to  get  it  in  this  Congress.  That  ques- 
tion must  go  back  to  the  people  and  must  be  fovight  out,  and 
in  my  opinion  it  will  be  fought  out  in  1896  and  wiU  be  properly 
and  finally  determined. 

So  that  the  people  of  this  country  will  then  determine  for  them- 
selves whether  we  are  to  have  a  permanent  single  gold  standard 
or  whether  we  shall  reinstate  and  rehabilitate  silver.  But  if  we 
undertake,  as  this  bill  does,  to  obscure  that  issue,  to  get  up  side 
issues,  temporary  makeshifts,  we  are  to  that  extent  abandoning 
that  great  issue,  if  it  can  possibly  be  abandoned.  But  I  warn  gen- 
tlemen here  now  that  in  my  opinion  it  can  not  be  abandoned;  that 
all  attempts  to  bring  about  the  prosperity  of  this  country  by  the 
retirement  of  the  greenbacks,  by  issuing  bank  notes,  and  by  other 
schemes  that  we  have  before  us  will  be  utter  failures;  for  this 
same  witness,  Mr.  Butler,  states  the  truth  when  he  says  that  the 
gold  standard  can  not  be  maintained  in  this  country  unless  we  re- 
duce prices  so  as  to  conform  to  the  prices  of  the  world;  that  our 
property,  what  we  produce,  must  be  put  in  the  market  cheaper 
than  the  products  of  other  countries  in  order  to  bring  the  gold 
here  and  hold  it.  That  is  what  it  means.  There  is  no  other  way 
of  maintaining  a  gold  standard.  If  I  believed  in  the  single  gold 
standard  I  should  take  the  road  marked  out  by  the  gentleman 
from  Connecticut;  that  would  be  a  short  cut;  I  mean  his  proposi- 

1748 2 


10 

tion  to  refund  all  your  greenbacks  and  ultimately  all  your  silver, 
so  as  to  come  to  gold  and  gold  only,  with  national-bank  notes 
which  might  be  floated  upon  it.  Then,  as  a  matter  of  course,  the 
law  of  supply  and  demand  would  compel  prices  in  this  country  to 
sink  to  the  level  of  the  prices  of  the  world,  and  remain  there. 

That  is  the  only  question  for  the  people  of  this  country  to  de- 
termine; and  the  question  for  us  to  decide  right  here  is  whether 
or  not  we  expect  prices  to  go  lower  than  they  are  to-day;  for  this 
gentleman  tells  us  in  so  many  words  (although  he  says  it  is  cruel 
to  say  so)  that  the  farmers  of  the  West  and  South,  all  of  whose 
products  are  exported  and  their  prices  measured  in  gold,  although 
they  complain  now  of  hard  times  and  low  prices,  must  expect  still 
lower  prices  for  all  their  commodities,  however  cruel  the  fact  may 
be.  Do  we  want  to  be  victims  of  such  a  policy  as  that?  That  is 
the  great  question  to  be  settled  before  this  currency  question  can 
be  settled. 

Mr,  BRYAN.  Is  it  not  a  fact,  too,  that  the  fall  in  prices  must 
be  continuous,  without  any  limit  whatever,  because  of  the  insuffi- 
ciency of  the  gold  supply  of  the  world? 

Mr.  BLAND.  Oh,  unquestionably.  As  other  nations  are  pro- 
ceeding to  adopt  the  gold  standard  the  strain  is  getting  greater. 
There  is  no  question  about  that.  As  population  increases  the 
greater  still  the  demand  for  gold. 

Mr.  LACEY.  Has  the  gentleman  considered  tlie  question 
whether  this  bank  paper  would  not  ultimately  be  redeemed  only 
in  silver,  so  that  under  the  bill  here  proposed  we  would  get  finally 
to  a  silver  standard? 

^Ir.  BLAND.  A  silver  standard  with  limited  coinage!  There 
is  but  one  way  to  get  to  a  silver  standard.  Whatever  gentlemen 
may  call  a  silver  standard,  there  is  but  one  way  to  reach  it — to  open 
the  mints  of  the  country  to  the  unlimited  use  of  silver.  Of  course 
we  understand  the  gold  advocates  insist  that  the  very  object  of 
limiting  the  coinage  of  silver  is  to  maintain  the  gold  standard. 
This  country  and  this  people,  almost  equal  in  population  to  France 
and  Great  Britain  combined — in  territory  beyond  comi)arison  with 
those  countries — with,  demands  for  the  commercial  use  of  money 
gi'eater  than  those  of  France,  Germany,  and  England  combined, 
could  give  employment  to  all  the  silver  that  would  come  here  and 
at  a  par  with  gold,  or  sufficiently  near  it  for  all  practical  pur- 
poses. We  had  a  gold  circulation  at  one  time.  When  the  silver 
dollar  was  the  unit  of  account  or  value  it  was  worth  3  to  6  cents 
more  than  the  gold  dollar,  and  no  inconvenience  resulted. 

Another  of  these  witnesses  admits  that  the  only  way  to  drive 

fold  out  is  to  coin  silver  to  take  the  place  of  the  gold;  and  until  we 
ave  a  sufficient  amount  of  silver  to  take  the  place  of  all  the  gold 
we  shall  still  have  the  gold,  because  the  volume  of  money  will  not 
be  increased,  or  that  increase  will  be  shown  only  as  gold  begins  to 
leave  the  country.  But  gold  will  not  go  until  silver  takes  its 
place.  But  suppose  it  should  go — $500,000,000,  of  it  if  you  please — 
and  we  have  silver  to  take  its  place  in  order  to  maintain  prices 
here?  What  is  the  effect  of  sending  this  gold  to  other  countries, 
especially  to  gold  standard  countries,  where  we  find  a  market  for 
so  large  a  i)roportion  of  our  farming  and  manufactured  products? 
It  simply  means  the  raising  of  the  prices  of  all  those  commodities 
in  those  markets;  and  this  is  the  only  way  to  raise  them.  £im.et- 
17i8 


11 

aUism!  That  will  permit  the  use  of  silver  here,  or  silver  and  gold, 
and  will  swell  the  volume  of  the  money  of  the  world,  will  raise 
prices  the  world  over.  There  is  no  other  remedy  for  low  prices 
and  hard  times  in  this  country. 

All  your  makeshifts  are  but  a  fraud  and  a  sham.  I  believe 
that  the  American  people  will  after  whUe  understand  this,  if 
they  do  not  now.  It  may  take  a  few  years  more  of  hard  times, 
of  grinding  poverty,  a  few  more  bank  failures,  to  teach  them  this 
lesson.  And  as  my  distinguished  friend  from  Pennsylvania  [Mr. 
Sibley]  has  said  in  his  speech  to-day,  the  men  who  have  hereto- 
fore enjoyed  the  profits  of  this  increased  value  of  their  securities 
are  to-day  becoming  very  much  alarmed  on  account  of  the  shrink- 
age of  value  of  the  property  or  wealth  on  which  these  securities 
are  resting.  Take  your  railroad  securities.  Half  of  your-  rail- 
roads are  to-day  in  the  hands  of  receivers.  I  do  not  like  to  al- 
lude to  this  railroad  question  just  now,  and  will  not  do  so  for  the 
purpose  of  giving  otfense  to  any  members  of  this  House. 

You  undertook  recently  to  save  the  railroad  monopolies  from  the 
effects  of  the  single  gold  standard  by  permitting  them  to  pool,  to 
go  into  trusts.  Why  was  that  done?  Simply  because  the  shrink- 
age of  the  value  of  their  earnings  and  their  securities  was  bank- 
rupting those  corporations,  and  they  came  here  for  relief.  All 
the  banking  and  railroad  monopolies  and  their  trusts  come  here 
to  be  saved.  The  tariff  barons  and  all  of  them  come,  each  and 
every  one  seeking,  by  means  of  legislation  at  the  hands  of  Con- 
gress, to  escape  the  crash  that  is  coming  in  the  future,  by  being 
made  the  prefeiTed  pets  of  Congress. 

Mr.  Chairman,  in  the  name  of  an  outraged  Democracy  I  protest 
against  the  whole  proceeding.  I  have  been  a  Democrat  all  my 
life,  and  expect  to  live  and  die  one,  battling  for  the  principles  of 
that  great  party.  I  believe  them  to  be  essential  to  the  perpetuity 
of  the  Republic.  I  have  seen  them  trampled  upon  here  day  by  day 
and  month  by  month.  But  this  House  is  not  the  Democratic  party. 
Neither  is  this  Administration  the  Democratic  party.  [Laixghter 
and  applause.]  I  will  appeal  from  this  presence  to  that  vast  yeo- 
manry of  this  country,  the  great  masses  of  the  people,  and  I  hope 
that  there  will  be  a  sufficiency  of  the  Democratic  party  to  rally 
around  the  great  principles  of  Democracy,  therefore,  in  the  coming 
days  and  reorganize  the  party  on  the  principles  of  Jefferson  and 
Jackson,  and  go  back  to  the  ancient  days  and  landmarks  on  which 
the  party  has  grown  and  prospered  and  made  this  country  great 
and  happy. 

I  have  no  sympathy  with  all  of  these  schemes  of  monopoly,  na- 
tional banks,  and  trust  mouoi^olies.  They  do  not  belong  to  our 
system  of  government.  I  have  no  sympathy  with  the  legislation 
which  has  been  inaugurated  in  their  behalf — railroad  pooling, 
trusts,  and  monopolies  of  all  kinds.  It  is  true  that  the  House  has 
conformed  in  a  great  many  ways  to  the  demands  of  the  people.  It 
has  passed  a  great  many  very  important  bills  on  the  lines  of  De- 
mocracy; and,  so  far  as  we  are  concerned,  we  liave  conformed  in 
the  tariff  as  nearly  as  we  could  to  our  promises  and  pledges.  We 
passed  the  seigniorage  bill  and  repealed  the  Federal  election  law, 
and  enacted  a  great  many  measures  of  importance  to  the  people  of 
this  country;  and  yet  on  this  money  question  we  have  not  con- 
formed to  our  principles  or  to  our  pledges.    And  we,  Mr.  Chair- 

1748 


12 

man.  who  believe  in  the  principles— the  great  principles  of  Democ- 
racy—-sv-ill  insist  that  neither  now  nor  in  the  futiire  shall  there 
be  any  compromise  on  this  subject  that  does  not  look  to  the  res- 
toration of  the  money  of  the  Constitution  and  bringing  the  Demo- 
cratic party  back  on  the  lines  of  Democratic  principles.  [Ap- 
plause.] 

i  do  not  desire,  sir,  to  proceed  further  at  this  time 

Mr.  SIBLEY.  Before  the  gentleman  from  Missouri  concludes 
I  would  like  to  ask  him  a  question,  with  his  consent. 

]\Ir.  BLAND.     Certainly. 

:Mr.  SIBLEY.  Is  it  not  a  fact  that  96  per  cent,  or  somewhere 
in  that  neighborhood,  of  all  the  commercial  transactions  in  this 
country  are  with  our  owti  peojile,  and  only  4  per  cent  or  there- 
aboutsof  the  commercial  transactions  are  with  those  countries 
that  are  upon  the  gold  standard  to-day?  That  being  so,  I  ask  the 
gi'utleman  if  he  can  supply  any  reason  or  explain  why  we  should 
legislate  for  the  4  per  cent  rather  than  the  9(5  per  cent. 

Mr.  BLAND.  It  is  true;  but  beyond  all  that  there  is  a  greater 
q\iestion  in  my  opinion.  As  I  stated  a  moment  ago  the  restoration 
of  silver  in  this  country  would  drive  Europe  to  it,  for  we  would 
take  over  the  rest  of  the  world.  So,  Mr.  Chairman,  the  question 
is  one  that  goes  beyond  our  o%\Ta  confines.  I  realize  the  fact  that 
we  must  be  prosperous  to  a  certain  extent  or  suffer  to  a  certain 
extent  in  accordance  with  the  xirosperity  of  the  civilized  world. 
Our  relations  are  so  close  with  them  that  this  is  necessary.  But  in 
the  restoration  of  bimetallism  we  not  only  open  the  way  to  pros- 
perity at  home  but  throughout  the  whole  world.     [Applaiise.j 

Siiice  I  was  interrupted,  I  will  say  a  few  words  more. 

It  is  not  possible  for  me  to  vote  for  this  bill. 

Wlien  the  bill  rechartering  the  national  banks  and  thus  giving 
the  system  renewed  life  for  twenty  years  passed  in  the  Forty- 
seventh  Congi-ess,  I  opposed  that  bill  on  the  general  ground  of 
oi)position  to  the  whole  system  of  national  banks  as  being  un- 
democratic. 

Among  other  things,  I  said: 

No  man  goes  to  the  bank  counter  and  demands  a  redemption  of  a  national- 
bank  l>ill.  Why?  Because  it  is  pi-actically  Uoverniuent  paper  and  is  as  good 
as  tlie  paper  in  which  it  would  be  redeemed.  The  ponding  bill  i)roposes  to 
extenil  the  charters  of  these  banks  for  twenty  years  and  thus  give  tuem  for 
tlic  term  of  forty  years  the  use  of  the  Government  paper  without  costing 
thrni  a  dollar.  That  is  one  of  the  objects  of  the  pending  bill.  It  pnnioses  to 
e.\ti'nd  the  time  for  the  banks  to  redeem  their  circul.-ition,  and  thev  know  it. 
Yet  they  couie  ht-re  and  claim  they  are  acting  for  the  benefit  of  tne  people. 
This  i.s  one  of  the  swindles  to  be  perpetrated. — Conyressional  Record,  Forty- 
seventh  Congress^  first  session,  page  3910. 

Since  my  record  on  rechartering  the  national  banks  has  been 
questioned,  not  here,  where  my  uniform  opi)osition  is  loiown,  but 
in  other  quarters,  I  shall  refer  to  the  Record.  I  voted  against 
the  bill  to  recharter  these  banks  when  the  bill  passed  the  House. 
(See  Congressional  Record,  volume  13,  page  4137.) 

The  bill  after  it  passed  the  House  went  to  the  Senate.  I  was 
called  home  on  important  business.  While  absent  I  paired  with 
Mr.  Heilman,  Republican,  who,  on  its  passage  in  the  House,  voted 
for  the  bill,  and  was  a  friend  of  the  measure.  (See  Record,  vol- 
ume 13,  page  5853.) 

The  Record  shows  that  when  the  conference  report  was  agreed 

1748 


13 

to  and  the  bill  finally  passed  I  was  paired  with  Mr.  Heilman. 
(See  Record  last  referred  to.) 

I  also  offered  an  amendment  to  the  bill  rechartering  national 
banks,  prohibiting  any  further  issue  of  bank  notes,  and  providing 
for  the  retirement  of  all  bank  notes  and  issuing  Treasury  notes, 
having  the  same  legal-tender  qiialities  as  the  bank  notes,  to  take 
the  place  of  the  bank  notes.  (Volume  13,  Congressional  Rec- 
ord, Forty-seventh  Congress,  page  3911.) 

Hear  what  the  great  Thomas  H.  Benton  had  to  say  about  the 
old  national-bank  system.  I  quote  from  Benton's  Thirty  Years' 
View,  volume  2,  page  263. 

Mr.  Benton  rapidly  summed  up  with  a  view  of  the  dangerous 
power  of  the  bank  and  the  present  audacity  of  her  conduct: 

She  wielded  a  debt  of  $70,000,000  with  an  organization  that  extended  to 
every  part  of  the  Union,  and  she  was  sole  mistress  of  the  mc^neyed  power  of 
the  Republic.  She  had  thrown  herself  into  the  political  arena  to  control  and 
govern  the  Presidential  election.  If  she  succeeded  in  that  election  she  would 
wish  to  consolidate  her  power  by  getting  control  of  other  elections.  Gov- 
ernors of  States,  judges  of  the  courts,  Representatives  and  Senators  in  Con- 
gress, all  must  belong  to  her.  The  Senate  especially  must  belong  to  her,  for 
there  lay  the  power  to  conflrm  nominations  and  to  try  impeachments;  and 
to  get  possession  of  the  Senate  the  legislatures  of  a  majority  of  the  States 
would  have  to  be  acquired.  The  war  is  now  upon  Jackson,  and  if  he  is  de- 
feated all  the  rest  will  fall  an  easy  prey.  What  individuals  could  stand  in 
the  States  against  the  power  of  the  bank,  and  that  bank  flushed  with  a  vic- 
tory over  the  conqueror  of  the  conquerors  of  Bonaparte?  The  whole  Gov- 
ernment would  fall  into  the  hands  of  this  moneyed  power.  An  oligarchy 
would  be  immediately  established,  and  that  oligarchy  in  a  few  generations 
would  ripen  into  a  monarchy. 

All  governments  must  have  their  end.  In  the  lapse  of  time  this  Republic 
must  perish ;  but  that  time  he  now  trusted,  was  far  distant;  and  when  it  comes 
it  should  come  in  glory  and  not  in  shame.  Rome  had  her  Pharsalia  and 
Greece  her  Chaeronea,  and  this  Republic,  more  illustrious  in  her  birth  than 
Greece  or  Rome,  was  entitled  to  a  death  as  glorious  as  theirs.  She  would  not 
die  by  poison — perish  in  corruption — nol  A  field  of  arms  and  glory  should  be 
her  end.  She  had  a  right  to  a  battle,  a  great  immortal  battle,  where  heroes 
and  patriots  could  die  with  the  liberty  they  scorned  to  survive,  and  conse- 
crate with  their  blood  the  spot  which  marked  a  nation's  fall. 

If  one  bank  had  or  threatened  all  this  power  for  mischief  what 
could  or  would  the  many  thousand  banks  this  bill  would  cause  to 
be  organized  do — all  of  them  looking  to  Congress  for  aid  and 
special  privileges?    See  what  a  power  to  control  the  Government. 

Appendix. 

The  following  appendix  is  submitted: 

Mr.  Butler,  referred  to  in  the  foregoing  remarks,  stated  before 
the  committee  that  reported  the  currency  bill,  as  follows,  pages 
128,  129,  130: 

Now,  Mr.  Chairman,  there  are  only  two  ways  by  which  that  immense 
amount  of  maturing  obligations  can  be  paid  by  this  country — that  is,  by  the 
product  of  its  soil  and  industry,  or  by  its  gold  and  silver.  Of  course,  gold 
and  silver  produced  from  our  mines  in  excess  of  our  own  local  needs  are  as 
legitimate  an  article  of  export  as  cotton,  wheat,  or  petroleum.  But  we  are 
met  by  this  fact:  If  our  exports  exceed  our  imports  by  $100,000,000  year  after 
year  there  is  still  a  variable  balance  of  trade.  Now,  the  Government  does 
not  occuijy  any  pi  isitii  )n  by  which  it  can  come  in  and  arrest  that  tendency  and 
that  outflow  of  the  precious  metals.  It  is  purely  a  question  of  commerce  and 
trade,  and  to  commerce  and  trade  it  must  be  left.  The  Government  is  as 
powerless  in  the  matter  as  a  10-year-old  child.  Selling  bonds  will  have  no 
effect  upon  it.  And  I  will  inject  this  remark  just  here:  It  has  been  fre- 
quently urged  on  the  Government  to  sell  its  bonds  abroad  and  import  gold. 
You  can  bring  the  mountains  of  Switzerland  here  just  as  well  as  you  can  do 
that.  So  long  as  these  conditions  exist  gold  will  leave  the  country,  and  the 
1748 


14 

niiestion  which  forces  itself  to-diiy  on  every  reasonal)le  man's  mind  is  this. 
How  long  will  that  continue  and  the  country  remain  on  a  sound  financial 
basisi* 

I  am  not  an  alarmist.  I  have  been  in  th<>  liankini;  business  iUl  my  life,  from 
a  boy  uj).  I  havi'  been  throuRh  all  the  piiiiics,  but  I  will  confess  that  I  have 
never  seen  the  time  when  I  felt  m<ire  uneasiness  in  i-e^iird  to  the  future  of 
the  country  than  I  do  at  this  hour.  The  (luestion,  neutlemon,  is,  How  can 
this  outflow  of  Kold  be  arrested  and  the  danger  to  our  national  finances  b« 
overcome?  There  i.s  but  one  sintrle  way  bv  which  any  country  caii  arreat 
anv  undut»  exiiortation  of  its  i)recious  metals.  That  tliiufx  comes  (whether 
voluntarily  or  otherwise)  through  an  adverse  condition  of  excbanere  which  de- 
mands exportation  of  the  precious  metals,  and  whi<;h  reacts  on  the  banking 
inturests  of  the  country,  (uiusing  the  banks  to  contract  their  loans.  That 
process  ends  in  forcing  clown  prices,  so  that  in  the  country  which  the  gold  is 
leiving  and  in  the  other  countries  to  which  it  is  flowing  prices  will  be  at  par, 
making  :ill<^wance,  of  course,  for  the  cost  of  transportation,  interest,  etc. 
That  is  the  oidv  method  bv  which  it  can  be  corrected. 

If.  Mr.  (Miairinan,  this  difficulty  is  the  result  of  distrust,  and  if  it  has  grown 
out  of  the  fact  that  foreigners  have  sent  home  our  securities  in  large  amounts, 
the  trouble  will  jirobably  pass  away  during  the  coming  winter  and  spi-ing. 
Congress  can  lio  much  to  relievo  all  this  distrust.  Nay,  in  cau  do  enough  to 
build  U})  contiilence  and  bring  tens  and  tens  of  millions  of  dollars  of  foreign 
capital  into  this  country,  and  then  certainly  this  movement  of  gold  would  be 
arre.sted,  and  the  ('ountry  would  have  nothing  to  further  fear.  But^if  this 
outflow  of  gold  is  the  result  of  economic  causes  independent  of  any  purely 
fijiancial  strife,  gold  will  continue  to  go  until  it  has  eliminated  the  surplus 
currency  of  our  circulation— until  it  has  gone  in  such  quantities  as  will  put  a 
pressure  on  all  the  financial  institutions  of  the  nation.  It  will  continue  to  go 
until  the  peojjle,  who  are  even  now  crying  about  low  pri<;es,  will  be  very  glad 
to  sell  their  products  (I  am  very  sorry  to  say  it,  it  seems  so  cold  and  cruel)  at 
lower  prices  than  they  sell  now.  I  am  afraid  that  prices  will  go  even  lower 
before  the  arrest  of  giild  can  be  made. 

Mr.  Chairman,  there  have  been  immense  changes  in  the  natural  relations 
between  the  United  States  and  other  countries  m  relation  to  this  country 
during  the  jiast  four  or  five  years.  Some  years  ago  I  warned  Western  and 
Southern  men  against  the  probability  of  low  wheat  and  low  cotton.  I  told 
them  (that  which  has  now  oecome  a  fact)  about  Russia  extending  her  rail- 
ways into  westi-rii  Asia,  about  Egj'pt  raisiug  wheat,  and  about  India  draw- 
ing" from  London  i'itl,(t(i(i,(i«)  everv  year  foi- seven  arti(-les  of  raw  material- 
wheat,  cotton.  oi)ium.  rice,  etc.  To-day  the  United  States  stands  confronted 
with  a  competition  which  it  never  had  dreamed  of,  and  which  apparently 
very  few  people  in  the  country  to-day  .seem  to  know  anything  about.  It  has 
western  Asia,  with  Rus.sian  railways  to  bring  its  products  to  market.  It  has 
Egypt,  it  has  India,  and  it  ha.s  South  America  in  its  sweep.  It  is  hard,  dread- 
fully hard,  on  the  farmers  of  the  United  States.  But  those  who  stand  nearest 
to  the  soil  havi-,  from  the  foundation  of  the  world  to  this  hour,  always  had  a 
struggle  for  a  very  moderate  existence.  I  see  no  reason  to  believe  that  there 
will  be  any  change  in  the  future,  but  I  see  many  reasons  to  believe  that  all 
the  wheat  and  cotton  producers  of  this  country  have  got  before  them  a  long 
competition,  and  they  must  suffer  mercilessly  from  countries  where  labor  is 
cheap  and  where  the'Government  does  all  it  can  to  bring  the  products  of  the 
country  into  market. 

These  questions,  gentlemen,  all  affect  the  finances  of  the  nation,  because 
they  all  act  to  produce  an  advor.se  condition  of  exchange.  I  need  not  say  to 
BO  intelligent  a  body  of  men  that  if  we  .send  abroad  le.ss  cotton,  less  wheat, less 
corn,  less  i)etroleum,  something  el.se  must  go  to  take  their  place.  I  can  see 
but  one  remedy,  and  that  Ls  brains.  Brains  in  everything,  in  farming  as  well 
as  in  banking  and  manufat^turing.  Farmers  must  produce  as  cheaply  as  pos- 
Bible,  and  the  country  must  (and  it  will)  enlarge  its  lines  of  exports,  and  so, 
I)erhaps,  arrest  or  retard  the  outflow  of  gold. 

Mr.  Butler  also  says  on  page  153  of  the  hearing  before  the  com- 
mittee, as  follows: 

Mr.  Bi^ACK.  I  will  ask  you  even  a  broader  question  than  that.  I  should 
like  to  get  your  ojjinion  as  to  the  effect  of  the  Government  establishing  the 
policy,  as  to  redeeming  this  paper  currency,  of  exercising  its  own  option 
whether  it  would  jiay  in  silver  or  gold,  rather  than  to  let  the  holder  decide 
that  question  for  himself. 

Mr.  Bi'TLEK.  I  can  not  answer  that  any  better  than  to  say  this:  The  very 
hour  I  am  (convinced  that  the  Government  will  do  it  I  will  sell  every  dollar's 
worth  of  personal  property  I  have  on  earth  and  invest  it  in  real  estate. 

Mr.  Ellis.  Why? 
1748 


15 

Mr.  Butler.  Because  that  brings  the  country  to  a  silver  basis  and  elimi- 
nate'^  nioi-e  than  half  the  value  or  personal  property  in  the  form  of  stocks, 
b'jnds.  mortgages,  and  everything  of  that  sort. 

Mr.  Hall.  Would  it  not  affect  real  estate  in  the  same  way  as  personal  prop- 
erty would  be  affected? 

Mr.  BUTLKH.  No;  because  in  the  case  of  real  estate  you  can  put  uip  the  rents 
in  proportion.    Before  the  last  election  I  was  intending  to  do  this,  and,  in- 
deed, commenced,  but  then  the  election  occurred,  which  was  not  so  favorable 
to  the  silver  men,  and  I  thought  better  of  it  and  stopped. 
1748 


THE  CARLISLE  BANKING  BILL. 


SPEECH 


HON.  W.  W.  BOWERS, 


OF    CALIFORNIA, 


HOUSE  OF  REPRESENTATIVES 


DKCEMlBKIt    as,    1894. 


WASHINGTON. 
1894. 


SPEECH 

OF 

HON.  W.  W.  BOWEES.^ 


The  House  being  in  Committee  of  the  "Whole,  and  having  under  oonsldera* 
tion  the  bill  (H.  R.  8149)  to  amend  the  laws  relating  to  national  banking  asso- 
tions — 

Mr.  BOWERS  of  California  said: 

Llr.  Chairman:  I  trust  I  am  duly  sensible  of  my  presumption 
in  addressing  the  House  upon  a  subject  that  the  ordinary  Con- 
gressman or  countryman  is  not  supposed  to  understand,  or,  indeed, 
to  have  any  accurate  knowletlge  of ;  a  subject  for  statesmen,  bank- 
ers, and  financiers,  only,  to  take  into  consideration;  but  when  I 
reflect  that  it  -wall  not  be  a  novel  or  unusual  proceeding  for  a 
member  of  the  House  to  talk  wdth  the  greatest  sincerity  and  con- 
scientious conviction  upon  a  subject  of  which  he  knows  very  little, 
I  am  emboldened  to  join  in  the  procession  and  talk  with  the  major- 
ity; not  as  one  having  authority  to  speak  by  reason  of  superior 
knowledge,  but  as  one  seeking  knowledge,  sitting  atthe  feet  of 
great  statesmen  and  financiers,  hoping  to  gather  for  himself  a  lit- 
tle of  the  wisdom  that  oozes  so  abundantly  from  great  minds. 
Could  all  these  great  statesmen  who  know  all  about  the  matter 
agree  as  to  what  was  true  and  what  was  false,  the  way  of  the 
common  man  would  be  easy;  but  here  we  have  our  acknowledged 
leading  statesmen  who  know  all  about  finances  telling  each  other 
they  are  entirely  mistaken  in  their  views,  and  this  of  course  con- 
fuses the  situation. 

The  events  of  the  past  two  years  have  impressed  me  deeply  re- 
garding the  great  knowledge,  wonderful  wisdom,  and  j)rophetic 
foresight  of  our  latter-day  financiers,  as  shown  by  their  predictions 
in  the  past.  How  clearly  they  saw  into  the  future  and  how  ac- 
curately foretold  the  coming  events,  we  all  know,  for  it  is  written 
in  the  books.  Let  me  refer  briefly  to  some  of  the  remarkable  ut- 
terances made  by  our  great  statesmen  during  the  past  two  years; 
that  thus  contemplating  the  past  we  may  judge  just  how  implic- 
itly we  may  rely  upon  what  these  same  statesmen  and  financiers 
tell  us  will  be  the  re.sult  of  this  proposed  legislation.  Let  me  begin 
with  the  greatest  statesman  on  earth — in  the  estimation  of  many 
people— the  President  of  the  United  States,  who  called  Congress 
together  in  extra  session  in  August  last  year.  I  quote  briefly  from 
his  message  to  Congress  at  the  opening  of  that  session: 

To  t'l  e  Congress  of  the  United  States: 

The  existence  of  an  alarming  and  extraordinary  business  situation,  involy- 
ing  the  welfare  and  prosperity  of  all  our  people,  has  constrained  me  to  call 
together  in  extra  session  the  people's  representatives  in  Congress,  to  the  end 
1735  8 


that  thrinit?h  a  wiso  iiiul  patriotic  exercise  of  the  legislative  duty  with  which 
tiu>y  K()li>ly  iirt>  charged,  present  evils  may  bo  mitigated  and  dangers  threat- 
ening the  Vut\ire  may  bi'  averted. 

Our  unfortunate  tinancial  plight  is  not  the  result  of  untoward  events  nor  of 
cojuliti'ins  relati'd  to  our  natural  resources;  nor  is  it  traceable  to  any  of  the 
afflictions  which  frcouently  check  national  growth  and  i)rosperity.  With 
plenteous  crops,  with  abundant  ])romise  of  remunerative  ])roduction  and 
manufacture,  with  unusual  invitation  to  safe  investment,  and  witli  satisfac- 
tory assurance  to  business  enterprise,  suddenly  tinancial  distrust  and  fear 
have  sprung  up  on  every  side.  Numerous  moneyed  institutions  have  sus- 
pended bocause  abundant  assets  were  not  immediately  availaljle  to  meet  the 
demanils  of  friijrlitened  depositors.  Surviving  c-orporati(ms  and  individuals 
are  cont<?nt  to  keep  in  hand  the  money  they  are  usually  anxious  to  loan,  and 
tho.se  engaged  in  legitimate  business  are  sur])rised  to  tind  that  the  securities 
tliey  offer  for  loans,  tliough  heretofore  satisfactory,  are  no  longer  acceijted. 
Values  .sui)pt)sed  to  be  fixed  are  fast  becciming  conjectural,  and  loss  and  failure 
have  invadi'd  every  branch  of  business. 

I  iK'lieVi- these  tilings  are  priucipally  chargeable  to  Congressional  legisla- 
tion touching  the  i)urchasi'  and  coinage  of  sdver  by  the  General  Grovernment. 

It  is  of  the  utmost  iinpi  )rtance  that  such  relief  as  Congress  can  afford  in  the 
existing  situation  bo  afforded  at  once.  The  maxim  Ho  gives  twice  who 
gives  quickly"  is  directly  applicable.  It  may  be  true  that  the  embarrass- 
mentstrom  whicli  the  business  of  the  country  is  suffering  arise  asmuchfrom 
evils  apprehended  as  from  those  actually  existing.  We  may  hope,too,that  calm 
cotms(ds  will  prevail  and  that  neither  the  capitalists  nor  the  wage  earners 
will  give  way  to  unrea.souing  panic  and  sacrifice  their  property  or  their  in- 
terests under  the  influenci'  of  exaggerated  fears.  Neverthele.ss,  every  day's 
delay  in  removing  one  of  the  plain  and  principal  causes  of  the  present  state 
of  things  enlarges  the  mischief  already  done  and  increases  the  responsibility 
of  the  Government  for  its  existence. 

I  earnestly  recommend  the  prompt  repeal  of  the  provisions  of  the  act  passed 
July  14, 1890,  authorizing  the  purchase  of  silver  bullion. 

I  quote  also  from  one  of  the  leading  financiers  on  the  Demo- 
cratic side,  the  gentleman  from  New  York,  Mr.  Cockran.  In 
that  extra  session  called  by  the  President  to  repeal  the  Sherman 
law  Mr.  Cockran  made  a  speech  favoring  the  repeal.  In  this 
speech  he  said: 

Sir,  when  the  gavel  of  the  presiding  officer  descended  upon  the  desk  of  this 
House  on  the  Ith  of  March  last,  and  members  of  Congress  returned  to  their 
homes,  they  found  the  country  blest  with  universjil  prospeHty.  Everywhere 
the  flresof  content  blazed  ui)ou  tlie  hearthstone.  The  light  of  hope  illumined 
every  household.  Yet  in  a  period  when  everything  that  might  produce  pros- 
perity was  ours  the  skies  overhead  became  somber;  the  dark  cloud  of  panic 
settled  down  over  the  length  and  breadth  of  the  land,  wrappingin  its  sinister 
folds  countless  thousands  of  American  citizens,  threatening  to  send  the  gaunt 
sjiecter  of  starvation  stalking  over  American  highways,  menacing  the  cot- 
tages that  shi 'Iter  American  labor.  *  *  *  Our  bursting  granaries  show  that 
Providence  has  smiled  on  us  in  seed  time  and  harvest;  yet  in  every  section  of 
the  country  mills  are  closing,  industry  is  su.spended.  *  *  *  The  President 
of  the  United  States  has  called  us  together  at  a  period  of  immense  heat  to  ap- 
ply a  remedy  to  the  evil  from  which  this  country  suffers,  and  he  suggests  that 
tlio  disasters  which  threaten  us  have  their  root  in  the  operation  of  the  actof 
181K),  known  as  the  Sherman  silver  bill. 

FurthfT  on  he  says: 

I  venture  the  assertion  that  we  are  not  suffering  to-day  from  a  lack  of  money, 
but  from  a  redundancy  of  money.  The  Sherman  law  has  given  us  a  redun- 
dant currency.  The  greater  the  amount  issued  the  less  we  find  in  circula- 
tion. 

Senator  Sherman  also  gave  his  views  in  supporting  the  bill  to 
repeal  the  Sherman  Act,  in  which  he  said: 

1  heartily  and  truly  believe  that  the  best  thing  we  can  do  is  to  suspend,  for 
a  time  at  least,  the  purchase  of  silver  bullion.  *  *  *  In  the  meantime  let  the 
United  States  stand  upon  its  strength  and  credit,  maintaining  its  money,  dif- 
ferent kinds  of  money,  at  a  parity  with  each  other.  If  we  do  that,  I  think 
soon  all  these  clouds  will  be  dissipated,  and  we  may  go  home  1x)  our  families 
and  friends  with  the  consciousness  that  we  have  done  ^ood  work  for  our 
country  at  large. 
1723 


The  eminent  financier  and  banker,  Mr.  Harter,  predicted  the  en- 
tire recovery  of  the  patient  vinthin  thirty  dajs  after  the  repeal  of 
the  Sherman  law;  hut  it  is  unnecessary  to  quote  other  and  lesser 
lights.  Suffice  it  to  say  that  the  statesmen  and  financiers  of  both 
the  great  parties  were  for  once  substantially  agreed  upon  one  point, 
that  the  Sherman  Act  of  1890  was  what  ailed  the  country,  and  its 
repeal  would  be  immediately  followed  by  a  resumjition  of  business 
and  the  restoration  of  prosperity. 

The  law  was  repealed,  and  its  repeal  at  once  made  patent  to  the 
meanest  intellect  that  the  Sherman  Act  had  little,  in  fact,  nothing, 
to  do  with  bringing  on  the  cloud  of  panic,  the  great  disaster  that 
fell  upon  the  land;  that  if  the  repeal  had  any  effect  at  all  it  was 
to  add  to  the  common  distress.  It  was  demonstrated  beyond  all 
cavil  that  the  statesmen  and  financiers  were  all  wrong;  that  they 
did  not  know  of  the  future,  what  the  result  of  their  acts  would 
be,  and  had  not  correctly  diagnosed  the  case.  What  assurances, 
then,  can  they  give  us  tnat  any  of  them  now  attempting  to  change 
the  financial  system  of  the  country  know  what  they  are  doing? 
I  doubt  if  any  member  of  Congress  or  of  the  present  Administra- 
tion really  believes  that  the  Sherman  Act  was  in  any  appreciable 
degree  responsible  for  the  great  disaster  which  overtook  this  na- 
tion in  November,  1892,  and  which  resxilted  in  a  loss  to  the  people 
amounting  to  billions  of  dollars.  Indeed,  how  couldr  it  have  been 
so  potent? 

The  Sherman  Act  took  effect  in  1890.  Under  its  authority  biit 
$150,000,000  were  coined  all  told,  less  than  the  revenue  required 
to  support  the  Government  foiir  months,  and  nearly  the  whole  of 
this  in  the  years  1890, 1891 ,  and  1893;  and  yet  we  have"  the  testimony 
of  the  distinguished  financier  and  statesman  from  New  York,  given 
on  the  floor  of  this  House,  that  on  the  4th  of  March,  1893,  after  the 
coinage  of  nearly  the  whole  of  this  $150,000,000  of  silver  dollars, 
' '  universal  prosx^erity  prevailed  throughout  the  country  and  every- 
where the  fires  of  content  blazed  upon  the  hearthstone,"  etc. 
After  the  4th  of  March,  1893,  but  few  silver  dollars  were  coined. 
The  Executive,  regardless  of  his  oath  to  execute  the  laws,  delib- 
eratel}^  refused  to  enforce  the  Sherman  Act.  He  instructed  liis 
subordinates  to  disregard  it  and  was  sustained  by  members  on 
both  sides  of  the  House  in  this  violation  of  the  trust  of  his  oifice, 
and  was  thereby  given  warrant  to  annul  any  law,  for  he  had  the 
same  power  to  disregard  any  other  law  on  the  statute  books. 

Before  the  law  was  repealed  we  had  the  spectacle  of  this  Admin- 
istration inviting  the  operators  in  London  to  depress  the  price  of 
silver  there,  notifying  them  that  they  could  fix  the  price  to  suit 
themselves,  and  refusing  to  buy  silver,  as  the  law  required,  until 
the  English  operators  had  accomplished  their  work.  Indeed,  the 
bare  statement  of  the  facts  regarding  the  operation  of  the  Sher- 
man law  demonstrates  that  it  did  not  and  could  not  have  pro- 
duced the  disaster.  The  suspension  of  business  continued  after 
its  repeal,  the  factories  remained  closed,  the  gold  reserve  was  not 
increased,  but,  on  the  contrary,  continued  to  diminish,  and  then 
$50,000,000  of  gold  bonds  were  sold  to  replenish  it— fifty  millions 
added  to  the  debt  of  the  United  States.  But  the  proceeds  of  this 
sale  could  not  hold  up  the  gold  reserve  in  the  Treasury  for  barely 
thirty  days,  and  inside  of  ninety  days  it  was  again  down  to  low- 
water  mark,  and  $50,000,000  more  bonds  were  sold  to  get  gold,  and 
1725 


6 

$r)0.clOO,0(iO  more  thereby  added  to  the  debt  of  the  United  States- 
sold  in  ii  liiirrj-,  after  the  election  was  heard  from;  suddenly 
put  on  the  market,  that  the  transaction  might  be  closed  before 
Concrress  could  get  together  and  i)ossibly  prevent  it.  But  theAd- 
ministration  need  not  have  been  afraid.  Its  Congress  talks 
bravely  occasionally,  but  can  be  relied  upon  to  obey  orders  issued 
by  the  Commander-in-Chief.  I  said  these  bonds  were  placed  on 
the  market,  but  in  this  I  think  I  was  in  error.  They  were  pri- 
vately sold  to  a  syndicate,  wliich  was  undoubtedly  secretly  ar- 
ranged for,  and  the  bonds  practically  sold  to  it  long  before  the 
pul)lic  knew  that  bonds  were  to  be  sold;  and  this  is  statesmanship^ 
financiering!  And  still  the  gold  reserve  wiDnot  stay.  Still  it  de- 
clines— still  cries,  "Give!  Give!  More  bonds!  More  bonds!" 
Wliat  is  the  matter  now?  No  silver  dollars  to  speak  of  have  been 
coined  since  this  Administration  came  into  power.  The  law  has 
been  repealed  for  miich  more  than  a  year.  Still  the  gold  goes  out, 
the  revenue  falls  short,  and  bonds  continue  to  be  issued  and  the 
national  debt  increased. 

Silver  is  exonerated  by  the  inexorable  testimony  of  history  and 
the  present  condition  of  the  countrj'.  We  must  look  elsewhere 
for  the  cause  of  the  continued  depression  and  suffering.  Is  any- 
one deceived  as  to  the  real  cause,  the  root  of  the  trouble?  It  is  in 
evidence  that  the  common  people  of  the  United  States  are  not  de- 
ceived. Thej'^  gave  the  proof  of  that  only  last  month,  and  it  is 
woi-se  than  useless  for  this  Administration  to  attempt  to  deceive 
the  people  further  in  this  matter.  It  is  too  late.  It  does  not  seem 
possible  that  they  can  longer  deceive  themselves  by  these  "  miser- 
able makeshifts  "  and  blinds.  All  the  world,  with  the  possible 
exception  of  this  Administration,  knows  to-day  that  it  was  the  at- ' 
tack  made  by  the  leaders  of  the  Democratic  party  upon  American 
industries,  upon  American  factories  and  mills,  upon  the  laborers 
and  wage  earners  of  the  United  States,  that  brought  on  the  past 
and  present  distress. 

The  detei-mination  to  discharge  American  emploj'ees  in  America 
and  employ  cheap  European  laborers  in  Europe  in  their  stead;  to 
buy  of  foreigners  rather  than  of  our  owai  people;  to  hire  foreigners 
to  do  our  work  instead  of  doing  it  ourselves — so  long  as  this  is  to 
be  the  policy  of  this  Government  so  long  will  the  present  condi- 
tions continue,  until  the  Government  is  bankrupt,  or  the  work- 
Ingmen  and  working-women  of  these  United  States  accept  the 
wages  and  the  consequent  conditions  of  the  poorest-paid  laborers 
in  Europe;  until  the  American  laborer  consents  to  accept  the  situa- 
tion made  vacant  by  the  abolition  of  the  servile  labor  of  the  South. 
The  wage  earners  of  this  country  are  beginning  to  tinderstand  this 
and  have  given  notice  of  their  determination. 

Mr.  Carlisle  said  to  the  committee  that  "Mr.  White  thought 
that  the  present  difficulty  arises  more  from  the  fact  that  there  has 
been  a  deficiency  in  the  revenue  than  from  any  other  cause.  I 
am  not  able,"  he  says,  "  to  agree  with  Mr.  White  about  that." 
Then  he  immediately  added:  "It  is  true  that  we  did  not  have 
this  trouble  when  we  had  a  surplus  revenue,  because  we  were 
then  able  to  redeem  the  United  States  notes  in  gold  without 
touching  the  reserves." 

Is  it  not  a  matter  of  history  that  for  a  quarter  of  a  century  prior 
to  \SWi  not  a  bond  was  sold  by  the  United  States  to  strengthen  its 


gold  reserve  or  to  obtain  any  kind  of  money  to  defray  any  of  the 
expenses  of  the  G-overnment?  Is  it  not  a  fact  that  during  every 
one  of  these  years  the  United  States  Government  was  buying  bonds 
with  the  surplus  revenue  and  rapidly  extinguishing  the  public 
debt,  paying  within  twenty  years  upwards  of  two  bUlions  of  prin- 
cipal and  interest?  But  the  people  thought  they  wanted  a  change, 
and  they  got  it.  The  change  they  made  was  from  a  Republican 
Administration,  vnth  its  surplus  revenues,  buying  bonds  and  re- 
ducing the  national  debt,  and  the  country  "blest  with  universal 
prosperity,"  to  a  Democratic  Administration  that  immediately  re- 
duced the  revenues  so  that  it  is  compelled  already  to  sell  bonds  to 
the  amount  of  $100,000,000  to  pay  the  ordinary  expenses  of  the 
Government;  has  increased  the  national  debt  to  that  extent,  and 
has  dissipated  and  driven  out  of  the  land  that  "universal  pros- 
perity "  the  gentleman  from  New  York  so  eloquently  pictured. 

The  honorable  Secretary  does  not  agree  with  the  facts  of  history. 
The  Secretary  went  on  to  say,  "During  the  year  1893  the  net 
exports  of  gold  were  nearly  $87,000,000,  an  amount  never  equaled 
before  in  the  history  of  the  country.  That  was  caused,  I  think, 
not  by  the  fact  of  an  tnsuflficiency  of  revenues,  biat  by  the  distrust 
which  prevailed  in  financial  circles  not  only  here  but  abroad. " 
Then  he  naively  adds:  "  Of  course,  the  fact  that  our  revenues  were 
insufficient  was  one  of  the  features  which  aggravated  the  situa- 
tion." It  will  be  noticed  that  this  extraordinary  export  of  gold 
takes  place  during  the  first  year  of  the  Democratic  Administra- 
tion, and  he  tells  tis  that  he  "does  not  see  the  immediate  prospect 
of  the  Treasury  Department  being  in  a  position  which  will  enable 
it  to  avoid  the  issue  of  bonds."  And  so  the  gold  continues  to  go 
out  as  fast  as  ever.  Certainly  this  can  not  now  be  charged  to 
silver.  There  is  no  more  coinage  of  silver.  That  has  been  done 
away  with  and  the  world  notified  that  the  United  States  has 
adopted  the  gold  standard;  demonetized  and  repudiated  silver  as 
money. 

Why  do  not  the  Democratic  leaders  acknowledge  their  mistake 
and  set  themselves  at  work  to  get  right?  The  great  body  of  the 
Democratic  party  is  American.  The  only  trouble  with  it  is  that 
its  leaders  are  so  averse  to  getting  on  the  American  platform. 
They  have  such  an  intense  admiration  for  things  foreign.  But 
the  time  is  fast  approaching  when  they  must  get  in  line  with 
American  progress.  The  common  people  are  reading  and  think- 
ing and  voting,  and  they  are  voting  for  the  United  States  for  first 
place.  They  are  no  longer  to  be  deceived  by  the  specious  howls 
of  the  Democratic  stumpers  for  "cheap  goods  and  lower  prices." 
The  California  farmer  listened  to  the  Democratic  orators  descant- 
ing iipon  the  blessings  the  Democratic  party  had  bestowed  upon 
them  by  making  grain  sacks  3  cents  cheaper;  but  they  did  not 
hear  any  of  them  claiming  credit  for  reducing  the  price  of  the 
wheat  he  put  in  them  75  cents. 

When  he  came  to  figure  upon  the  proposition  he  concluded  he 
would  rather  pay  10  cents  for  the  sack  and  get  $2  for  the  wheat  he 
put  in  it  than  to  get  the  sack  for  5  cents  and  sell  the  wheat  in 
is  for  $1.25,  as  he  had  been  doing  since  this  "reform"  has  come 
upon  us.  He  finds  that  the  price  of  his  products,  what  he  has  to 
sell,  is  reduced  when  other  articles  are  cheapened,  and  he  is  the 
net  loser.  The  wage-worker  finds  that  his  wages  go  down  faster 
than  the  prices  of  the  articles  the  Democrats  are  trying  to  cheapen 
1735 


8 

for  him.  He  finds  that  if  his  opportunity  to  work  and  receive 
wages  is  taken  from  him  it  makes  no  difference  how  cheap  tilings 
are;  he  lias  nothing  to  buy  with.  The  merchants  of  Tehachapi 
found  as  a  result  of  Democratic  tariff  reform  that  the  three  great 
staples  of  that  section — wheat,  cattle,  and  sheep— were  made  so 
cheap  that  the  fanner  could  not  pay  his  store  bill  and  had  noth- 
ing to  buy  with — these  were  the  articles  he  had  to  sell — so  the 
merchants  failed  in  business.  They  could  not  pay  the  wholesaler 
of  San  FrancLsco,  and  in  turn  the  latter  could  not  pay  the  East- 
ern creditor.  The  raisin  grower  of  Fresno  knows  that  the  reform 
that  reduced  the  duty  on  his  products  reduced  the  selUng  price 
of  his  raisins,  did  not  benefit  the  consumer,  did  reduce  the  reve- 
nue of  the  Government,  and  was  a  clear  gift  by  the  United  States 
to  the  foreign  gi-ower. 

The  Democratic  theory  is  that  with  a  lower  rate  of  duty  the 
importations  will  be  largely  increased,  which,  if  true,  means  that 
a  larger  number  of  laborers  would  be  employed  in  foreign  coun- 
tries and  a  corresponding  number  of  our  own  people  thrown  out 
of  emplojanent  in  this  country,  and,  earning  no  wages,  could  pur- 
chase none  of  these  imported  articles.  So  the  very  means  taken 
by  our  Democratic  friends  to  cheapen  the  price  of  articles  the 
laboring  man  usually  buys  takes  away  his  means  to  buy  them. 
Hence  the  insufficiency  of  the  revenue  under  the  Democratic 
theory.  The  workingman  has  no  more  deadly  enemy  than  the 
man  who  wants  to  make  things  cheap.  The  true  method  to  cheapen 
articles  to  our  people  is  by  competition  among  themselves  in  pro- 
ducing them,  and  having  work  and  wages,  they  have  the  means 
to  buy  even  cheap  goods.  It  never  can  be  economy  on  the  part  of 
the  people  of  this  nation  to  buy  of  foreign  people  anything  we 
can  produce  or  manufacture  at  home.  The  money  sent  to  foreign 
laborers  to  pay  for  those  things  we  can  produce  at  home  is  so  much 
lost. 

The  gi"eat  object  is  to  give  emplojinent  to  our  own  people.  The 
Democratic  leaders  are  trying  to  get  the  country  back  to  the  busi- 
ness methods  that  obtained  in  Buchanan's  time,  to  hire  foreigners 
to  do  our  work  instead  of  doing  it  ourselves,  when  he,  like  our 
modem  Democratic  statesmen,  wondered  why  in  a  country  of 
such  magnificent  resources,  in  times  of  profound  peace,  the  gen- 
eral condition  of  the  people  should  be  so  unsatisfactory,  and  bonds 
of  the  Government,  bearing  12  per  cent  interest,  should  be  selling 
at  12  to  15  per  cent  discount.  It  was  because  the  people  were 
sending  away  all  the  money  they  could  get  by  borrowing  and 
otherwise  to  buy  those  things  they  should  have  produced  at  home 
and  kept  their  money  among  themselves.  Bonds  have  not  as  yet 
reached  the  cheap  condition  of  the  bonds  of  Buchanan's  time,  but 
it  is  onlj'  a  question  of  time,  and  a  comparatively  short  time,  when 
they  must  join  in  the  procession  of  cheap  thuigs  if  the  present 
business  policj'  is  kept  up. 

No  tinkering  with  the  finances  wiU  restore  prosperity.  It  will 
add  a  hundredfold  to  the  present  distress.  Consider  the  disrup- 
tion of  business,  and  the  great  loss  which  has  resulted  from  the 
tinkering  -with  the  tariff  and  the  distrust  which  prevails  here  and 
abroad,  caused  by  the  announcements  of  the  leaders  of  the  Dem- 
ocratic party  that  they  intend  to  continue  this  tinkering  with  the 
business  interests  of  the  United  States  in  the  hope  of  destroying 
more  industries,  aa  the  leaders  frankly  stated  on  the  floor  of  this 
Vf2& 


House  tliey  would  like  to  do.  And  yet  there  was  no  change  made 
in  the  system  of  the  tariff;  simply  a  change  in  the  schedule,  in 
rates  of  dut3^  It  still  remains  a  protective  tariff.  True,  it  is  the 
meanest  discriminating  protection  law  ever  enacted,  designed  to 
favor  certain  individuals  and  corporations,  but  still  every  rate  of 
duty  is  intended  primarily  for  protection;  the  revenue  is  second- 
ary and  incidental.  It  is  claimed  that  the  reduction  is  an  average 
of  5  per  cent  on  the  act  of  1890. 

Now.  in  view  of  the  distress  brought  upon  the  country,  the  almost 
incalculable  loss  resulting  from  this  tinkering  with  the  business 
interests  by  the  change  in  tariff  duties,  what  may  we  reasonably 
expect  should  this  proposition  to  radically  and  suddenly  change 
the  very  foundation  of  aU  our  business — our  financial  system — be- 
come a  law?  To  depart  from  a  safe  system,  which  has  stood  the 
test  of  years,  to  experiment  with  the  wild  theories  of  those  who 
seek  to  avoid  responsibility  for  their  mistakes  in  other  departments 
of  the  Government. 

The  gentleman  from  West  Virginia,  speaking  of  the  tariff  bill  of 
1884,  used  this  language: 

Wliatever  reduction  is  made  should  be  made  so  gradually  as  not  to  wreck, 
to  disturb,  or  to  alarm  any  of  our  gi-eat  industries. 

These  were  words  of  wisdom  then,  but  how  much  weightier 
when  applied  to  this  bill.  There  can  be  no  question  as  to  the  re- 
sult if  this  bill,  in  its  general  features,  shall  be  enacted  into  a  law 
during  the  lifetime  of  this  Congress.  A  panic  will  immediately 
and  necessarily  ensue,  such  as  this  country  has  never  experienced, 
even  if  the  new  were  the  better  system.  I  do  not  intend  to  speak 
of  the  details  of  the  bill  reported,  but  I  believe  it  is  apparent  to 
the  commonest  intelligence  that  the  logical  result  of  its  enactment 
into  law  would  be  to  destroy  national  banks  and  retire  their  cir- 
culation; to  establish  irresponsible  State  banks  in  their  places. 

A  few  days  before  I  left  my  home  in  California  I  received  a 
twenty-dollar  national-bank  note.  I  happened  to  notice  that  it 
was  issued  by  a  bank  that  had  failed  some  three  years  ago  and 
had  gone  out  of  existence.  I  was  at  the  time  standing  in  front  of 
the  building  where  the  bank  was  located  in  its  lifetime.  I  stepped 
into  a  bank  nearby,  presented  the  bill  to  the  cashier,  and  asked 
for  change.  He  handed  me  $15  in  gold  and  $5  in  silver.  I  then 
asked  him  if  he  noticed  the  bill  that  I  handed  him.  "No,"  he 
replied,  "  except  that  it  was  a  twenty-dollar  bill."  "Well,"  said 
I,  "it  is  on  a  broken  bank,  that  has  gone  out  of  existence."  He 
looked  at  the  bill  again  and  said:  "Why,  yes;  it  is  one  of  the  old 
California  National  bills."  I  said,  "Do  you  pay  bills  on  broken 
banks?"  "Why,  yes;"  he  replied,  "when  our  customers  want  it. 
If  you  have  any  more  bills  on  that  broken  bank,  I  will  give  you 
gold  or  any  other  kind  of  money  you  want  for  them,  dollar  for 
dollar." 

Mr.  Chairman,  that  is  the  kind  of  currency  we  have  now  in  the 
United  States — a  kind  never  known  elsewhere.  The  people  have 
got  used  to  that  kind  of  currency.  They  like  it,  and  the  man  or 
the  party  that  attempts  to  disturb  that  feature  of  our  financial 
system  will  be  ground  into  powder. 

There  is  but  one  way  to  preserve  this  very  desirable  condition; 
that  is,  that  no  money  of  any  kind,  whether  of  paper  or  metal, 
shall  be  a  legal  tender  or  lawful  money  in  any  case  except  such  as 

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bears  the  impress  and  stamp  of  the  United  States  of  America^ 
one  kind  of  money. 

Mr.  Chairman,  it  is  the  practice  of  physicians  to  experiment 
with  new  remedies  upon  dogs,  rabbits,  and  like  animals  before 
taking  the  risk  of  administering  them  to  the  human  species.  If  the 
dog  or  other  animal  survive  the  dose,  they  venture  in  time  to  give 
tlie  remedy  to  human  beings.  I  vpant  to  suggest  to  our  amateiir 
financiers,  and  also  to  those  financiers  who  have  graduated  and 
received  their  diplomas,  signed  and  certified  to  by  their  own  hand, 
that  they  follow  the  example  of  the  physicians  and  try  this  new 
financial  remedy  they  are  recommending  for  our  Uncle  Sam,  who 
is  so  very  ill  at  present,  on  a  dog  first.  If  it  does  not  kill  the  dog 
we  may  possibly  take  the  risk.  Think  of  it!  What  a  blessing  it 
would  have  been  and  how  much  trouble  and  worry  and  sickiiess 
nigh  unto  death  it  would  have  saved,  if  this  Democratic  tariif  re- 
form, which  Uncle  Sam  was  forced  to  take  by  these  financiers, 
had  been  tried  on  a  dog  first.  It  would  have  Mlled  the  dog,  and 
it  has  reduced  the  body  politic  to  a  state  of  emaciation  pitiful  to 
behold. 

The  simple  fact  is  that  through  this  tariff  reform  and  the  adop- 
tion of  the  gold  standard  the  manipulators  of  the  great  money 
centers  of  the  country  have  the  United  States  Treasury  at  their 
mercy  and  are  looting  it.  The  great  conspii-acy  has  culminated 
in  success.  The  man  who  is  in  favor  of  the  standard  silver  dollar 
being  recognized  as  legal  money  is  stigmatized  as  a  fiat-money 
idiot,  although  each  of  these  dollars  has  an  intrinsic  value  of  more 
than  two- thirds  its  face  value;  but  the  man  who  favors  a  paper 
promise  to  pay  that  has  no  intrinsic  value  whatever  is  a  sound- 
money  man.  In  the  system  of  finance  terms  become  sadly  in- 
volved. Here  we  have  a  proposition  to  change  the  whole  finan- 
cial system  of  the  country  for  a  new  system  the  base  of  which  is 
fiat  paper  money  entirely — not  a  real  dollar  anywhere  back  of  the 
whole  scheme.  Fiat  money  seems  to  be  all  right  where  it  is  issued 
for  the  sole  benefit  of  the  financiers  in  the  money  centers  of  the 
country. 

Is  anyone  deceived  by  the  repeated  assertions  of  some  members 
here  and  some  Senators  at  the  other  end  of  the  Capitol  that  they 
are  friendly  to  silver,  when  we  all  know  these  same  men  have  ever 
stood  ready,  with  knife  in  hand,  to  stab  silver  to  death?  Does 
anyone  believe  that  Mr.  Cleveland — whose  first  act  after  entering 
upon  his  ofiice  was  to  call  Congress  together  in  special  session  for 
the  sole  purpose  of  destroying  silver  as  money — intends  by  this  bill 
to  provide  for  its  more  extended  use?  Is  it  possible  for  anyone  to 
be  so  stupid  as  to  really  believe  it,  or  to  believe  that  the  Secretary 
of  the  Treasury  means  any  such  thing?  Are  any  so  blind  as  not 
to  see  in  tliis  State-bank  proposition,  which  is  a  sop  sweetened  to 
catch  the  silver  men  of  the  South,  the  scheme  to  give  silver  the 
last  and  finishing  stroke  by  permitting  State  banks  to  issue  small 
bills  and  fractional  currency?  All  this  talk  about  retiring  notes 
under  $10  is  too  transparent. 

Secretary  Carlisle  says:  "Our  stock  of  full  legal- tender  coins 
in  larger  in  proportion  to  the  stock  of  gold  than  in  any  of  the 
countries  named  except  Holland,  Belgium,  and  Spain;  and  yet  we 
continue  to  obstruct  their  circulation  by  the  issue  of  small  United 
States  notes  and  bank  notes,  which  serve  the  purpose  of  the  people 

1725 


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in  tlieii-  daily  transactions  no  better  than  the  coins  or  certificates 
based  upon  them."  And  he  shows  that  there  are  now  oxil stand- 
ing $318,000,000  legal  tender  of  a  less  denomination  than  $10. 
And  yet  he  proposes  by  this  bill  to  add  to  the  force  of  this  obstruc- 
tion to  the  use  of  silver,  so  that  it  will  be  absolutely  prohibited. 

France,  with  a  population  of  38,000,000,  a  national  debt  of 
$6,000,000,000,  has  $500,000,000  full  legal-tender  silver  money— the 
coinage  15  to  1 — and  uses  it;  pays  either  silver  or  gold  at  her  op- 
tion. Why  can  not  the  United  States,  with  a  population  of 
65,000,000,  double  that  of  France,  with  a  national  debt  of  one  and 
a  half  billions,  being  only  one-quarter  that  of  France,  with  $540,- 
000,000  of  leafal-tender  silver,  coined  at  the  rate  of  16  to  1,  exercise 
the  same  power  and  discretion  regarding  it  that  France  does? 
How  is  it  that  the  latter  country  can  do  this  with  an  inferior  coin, 
but  the  United  States  can  not  with  a  superior  coin?  Is  it  because 
the  financiers  and  statesmen  of  France  are  so  much  superior  to  or 
so  much  more  patriotic  than  ours? 

From  the  statement  of  the  Secretary  we  learn  that  there  are  about 
$475,000,000  of  legal  tenders  outstanding  that  cause  the  trouble, 
and,  speaking  of  the  condition  that  the  shy  locks  have  put  the 
Treasury  in,  compelling  it  to  buy  gold  for  their  benefit,  the  Comp- 
troller says: 

So  long  as  tlie  people  can  get  these  greenbacks,  then  the  issuance  of  bonds 
and  the  supplying  of  new  gold,  it  is  like  pouring  water  into  a  hole— into  an 
abyss  which  is  fathomless. 

The  Comptroller  could  not  have  meant  to  use  the  word  people  in 
this  connection,  or  he  used  the  word  inadvisedly'.  The  people  are 
not  doing  this.  He  should  have  used  the  word  "  shylocks;'"  then  his 
statement  would  have  been  exactly  correct.  The  people  are  not 
engaged  in  this  business. 

The  financiers  tell  us  that  the  United  States  can  not  act  in  finan- 
cial matters  for  itself,  independently;  that  we  are  a  dependent 
nation,  albeit  we  have  for  so  many  years  boasted  of  our  inde- 
pendence; that  we  must  look  to  older  and  wiser  nations,  partic- 
ularly to  England,  for  guidance  in  financial  matters.  So.  because 
England  demonetized  silver,  we  had  to;  but  England  pays  silver 
at  her  option.  Why  can  not  we,  and  receive  the  full  advantage 
of  our  sycophancy,  our  humble  servitude  to  her?  How  is  it  that 
France  is  allowed  to  remain  a  silver  countrj-  and  reap  the  advan- 
tage resulting?  France  must  be  an  independent  nation.  How  is 
it  that  every  nation  on  earth  uses  silver  as  money  coined  14  to  1 
and  15  to  1,  and  in  the  United  States  it  is  dangerous  to  the  general 
prosperity  to  allow  its  use  coined  16  to  1?  Simply  because  otir 
finances  are  now  controlled  by  English  financiers  and  English 
statesmen  in  England,  through  their  deputies  and  clerks  in  this 
country,  and  for  the  benefit  of  England. 

I  believe  the  experiment  would  be  well  worth  trying,  of  em- 
ploying some  American  financiers — some  American  statesmen — 
in  the  United  States  to  take  charge  of  our  financial  system  and 
administer  it  in  the  interests  of  the  people  of  the  United  States 
rather  than  in  the  interests  of  England,  as  it  is  now.  It  would 
be  a  radical  change,  and  would  perhaps  shock  the  Anglomaniacs 
among  us;  but  I  believe  the  common  people  of  the  United  States 
would  be  delighted  with  the  change. 

Should  one  of  these  shylocks  engaged  in  speculating  in  gold  (I 
say  speculating,  for  no  one  believes  this  withdrawing  of  gold 
1736 


12 

from  the  Treasury  is  required  in  legitimate  business,  for  since 
Decenilier  1  the  Avnthdrawals  of  gold  from  the  Treasury  amounts 
to  .'jiiS.oTO.'iTo,  of  which,  so  far  as  known,  less  tlian  $7,000,0.00  was 
intended  for  export,  less  than  that  amount  has  been  exported;  for 
wliat  purpose  was  the  balance,  $21,000,000,  withdrawn  within 
twenty-one  days?) — should  one  of  these  come  to  the  Treasury  and 
demand  gold  for  notes,  and  be  told  that  he  could  not  have  it.  as  these 
same  shylocks  in  New  York  City  last  year  told  those  people  who 
had  dei)osited  their  money  with  them,  and  wanted  some  of  it, 
that  it  was  not  convenient  for  them  to  pay  at  that  time,  and  they 
coiild  not  have  it — and  their  defiance  of  the  law  was  ajjproved  by 
tliis  same  Comptroller,  by  this  Administration,  by  our  financiers, 
and  commended  in  this  Congress — I  say,  suppose  the  Secretary 
of  the  Treasury  should  i)re8iuue  to  exercise  the  same  option,  the 
same  power,  which  he  may  lawfully,  to  protect  the  Treasm-y  and 
the  pet>ple  from  these  cormorants  that  the  latter  exercised  unlaw- 
f  ullv  in  holding  on  to  other  people's  money,  what  would  happen?  A 
panic?  Well,  who  would  be  hurt?  You  can  not  hurt  the  farmer 
much  more  than  you  have.  You  have  made  his  fields  unjjrofitable. 
You  are  buying  your  barley  in  Russia  to  be  used  in  the  barley- 
growing  State  of  Wisconsin,  your  wheat  in  the  Argentine  Repub- 
lic, and  importing  cotton  from  India  into  the  New  England 
States.  The  producer  and  the  wage  worker  are  already  at  the  bot- 
tom of  the  well.  Bring  on  your  financial  panic!  It  will  then 
be  Greek  meeting  Greek,  Shylock  versus  Shylock.  You  can  not 
make  matters  miich  worse  for  the  people,  and  if  oiir  credit  shall 
fall  so  that  we  can  not  buy  abroad,  and  ydW  be  compelled  to 
trade  at  home,  it  will  be  a  consummation  devoutly  to  be  -wished. 

K  in  these  "times  of  distrust  at  home  and  abroad"  United 
States  bonds  can  be  sold  at  a  i)remium  of  17  per  cent  to  obtain 
gold  (to  pour  into  an  unfathomable  abyss)  is  the  supposition 
violent  that  the  credit  of  this  nation  wiU  admit  of  the  authoriza- 
tion and  issuance  of  four  himdred  and  seventy-five  million  ten  and 
twenty  year  3  per  cent  bonds,  none  of  which  shall  be  of  a  greater 
denomination  than  $100,  to  be  exchanged  for  these  legal-tender 
notes  and  the  same  destroyed,  and  the  guerrillas  thus  disarmed, 
the  Government  to  give  notice  that  one  j^ear  after  said  bonds  were 
ready  for  delivery  in  exchange  for  said  notes,  all  notes  outstand- 
ing would  be  paid  in  standard  silver  dollars  onlj^?  Would  not 
something  like  this  be  better  sense  than  to  go  on  buying  gold  to 
"pour  into  an  unfathomable  abyss?" 

This  would  be  somewhat  in  the  nature  of  a  popular  loan,  and 
the  small  bonds  would  siibstantially  take  the  place  of  the  currency 
thus  withdrawn.  Then  let  the  Government  say  to  the  people :  ' '  We 
will  establish  a  postal  savings  system,  and  at  all  first,  second,  and 
thii'd  class  post-ofiices  you  can  deposit  your  savings  and  have" 
them  forwarded  to  the  United  States  Treasury  -without  risk.  They 
A\all  be  safely  kept  and  safely  used,  and  you  -will  be  paid  2  per  cent 
interest  on  such  deposits,  and  when  you  have  deposited  $100  j'ou 
may,  at  your  option,  receive  a  United  States  i)ostal  bond  for  that 
amount,  bearing  3  per  cent  interest. "  This  done,  the  United  States 
Treasury  would  no  longer  be  at  the  mercy  of  the  shylocks,  but 
would  be  firmly  upheld  by  the  people  of  the  United  States. 

All  tlie  machinery  necessary  to  begin  this  postal-savings  system 
is  in  place  and  the  offices  now  open.     I  know  there  are  several 

1725 


13 

very  great  objections  to  this  system,  perhaps  insuperable.  The 
first  is,  that  while  it  is  in  the  interests  of  the  Government,  it  is 
very  largely  in  the  interests  of  the  common  people  of  the  United 
States,  and  not  in  the  interests  of  the  slop-bucket-savings  attach- 
ments to  national  banks,  or  of  schemers  who  prey  upon  the  sav- 
ings of  others;  and  next,  it  does  not  require  an  army  of  additional 
Government  emploj^ees. 

But,  Mr.  Chairman,  let  us  try  to  legislate  for  the  common  peo- 
ple part  of  the  time.  If  they  are  prosperous,  all  are  prospering. 
In  all  these  financial  matters  we  legislate  from  the  banker's  stand- 
point, and  consult  his  and  the  money  changer's  interests.  Let  us 
consult  the  people's  interest  in  this  matter;  let  us  whenever  possi- 
ble coin  real  mioney  instead  of  printing  Government  debentures. 
If  these  legal  tenders  are  making  all  the  trouble,  and  we  can  not 
have  the  advantages  possessed  by  independent  nations  like  Eng- 
land and  France  of  exercising  our  option  of  paying  them  in  silver, 
let  us  retire  and  destroy  them  by  way  of  a  popular  loan  for  United 
States  bonds  of  small  denominations.  But  let  us  be  very  slow  in 
changing  a  banking  system  that  has  proved  the  safest  and  best 
ever  devised. 

Mr.  Chairman,  I  intended  to  read  in  my  time  my  proposition 
for  a  postal  savings  system,  which  I  think  would  give  greater  relief 
to  the  Treasury  and  be  of  far  greater  benefit  to  the  people  than 
the  pending  bill,  but  will  print  it  in  the  Record  as  an  appendix 
to  my  remarks. 

Appendix. 
A  bill  to  establish  a  postal  savings  bank  department. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States 
of  America  in  Congress  assembled.  That  all  first,  second,  and  third  class  post- 
ofiices  are  hereby  designated  as  postal  savings  bank  otlices,  at  which  lawful 
money  of  tlie  United  States  may  be  deposited  as  hereafter  provided. 

Sec.  2.  That  any  person  of  the  age  of  13  years  or  over  may  deposit  at  such 
offices  any  sum  of  lawful  money  of  the  United  States:  Provided,  That  no 
fractious  of  a  dollar  shall  be  received  for  deposit,  nor  shall  any  depositor  have 
standing  to  his  credit  more  than  |1,C0  I,  exclusive  of  interest,  within  the  year 
following  his  first  deposit,  nor  more  than  $3,000,  exclusive  of  interest,  to  his 
credit  at  any  time  thereafter. 

Sec.  3.  That  upon  the  receipt  of  any  deposit  at  such  an  office  the  postmaster 
shall  deliver  to  the  depositor  a  postal  savijigs  bank  pass  book,  in  which  he 
shall  enter  the  amouTit  of  the  deposit  and  certify  it  by  his  official  stamp,  and  in 
which  book  succeeding  deposits  shall  be  entered  ana  certified  in  like  manner. 

Sec.  4.  That  any  depositor  wishing  to  withdraw  all  or  any  part  of  his  de- 
posits may  apply  to  the  postmaster,  who  shall  furnish  him  with  a  blank  form 
of  application  for  withdrawal,  which,  when  prorjerly  filled  out  and  signed, 
the  postmaster  shall  forward  to  the  Postmaster-General  at  "Washington,  who, 
upon  its  receipt,  shall  draw  a  check  upon  the  Treasury  for  the  amount  and 
forward  the  same  to  the  depositor,  under  cover  to  the  postmaster  who  for- 
warded the  application,  and  by  him  shall  be  delivered  to  the  depositor. 

Sec.  5.  That  everjr  depositor  shall  forward  his  deposit  pass  book  to  the 
Postmaster-General  in  an  envelope,  whi(;h  will  be  f ui-nished  him  at  the  post- 
office,  once  in  each  year,  namely,  on  the  anniversary  of  the  first  deposit  made, 
for  examination  and  entry  of  amount  of  interest  found  due. 

Sec.  6.  That  intei-est  at  the  rate  of  2  per  cent  per  annum  shall  be  computed, 
allowed,  and  entered  in  the  pass  book  to  the  credit  of  the  depositor  once  in 
each  year  upon  the  average  amount  on  deposit  for  the  year  preceding:  Pro- 
vided, That  if  in  any  case  it  shall  be  found  that  the  total  sum  of  interest  for 
the  year  be  less  than  half  a  dollar,  then  no  interest  shall  be  allowed  or  entered 
upon  the  pass  book,  but  if  the  interest  shall  be  found  to  be  more  than  half  a 
dollar  and  less  than$l,  then  the  interest  diie  shall  be  entered  on  the  passbook 
as  $1,  and  in  no  case  shall  fractions  of  a  dollar  be  entered  upon  the  pass  books 
or  books  of  account  of  the  postal  savings  bank  department,  it  being  the  intent 
of  this  act  that  a  dollar  shall  be  the  unit  of  all  accounts  of  the  postal  savings 
bank  department. 

Sec.  7.  That  no  sum  of  money  deposited  under  this  act  shall,  while  in  the 
hands  of  any  postmaster,  or  while  in  the  course  of  transmission  to  or  from 
the  Postmaster-General,  at  any  time  be  liable  to  demand,  seizure,  or  deten- 
tion under  any  legal  process  against  the  depositor  thereof. 
1725 


14 

Sec.  8.  That  tlio  postmristors  and  otlior  ofticors  of  tho  post-offioo  engaefedin 
the  receii)t  or  payiiiciit  of  (l.'jKt.sit  slmll  nntdisclnsi^  tlie  name  of  any  depos- 
itor, or  the  amount  iKpositi-'d  or  willulrawn,  exct-pt  to  the  Postmiister-Gen- 
erul,  or  to  such  of  his  otlict-rsas  are  appointed  to  asuist  in  carrying  into  oper- 
ation the  provisions  of  this  act. 

Sec.  !•.  That  nil  moneys  received  for  depo.sit  under  this  act  shall  be  for- 
warded to  tho  Po.stma.sti'r-Gcneral,or  to  such  United  States  depository  as  he 
mav  direct, as  often  as  once  each  week, and  dailyfrom  such  officers  as  he  may 
dcsifrnate:  and  all  moneys  so  forwarded  shall  he  paid  into  tho  Treasury  and 
shall  be  credited  to  an  account  to  be  culled  "the  post-office  savings  bank" 
account,  and  all  sums  withdrawn  on  account  of  depositors  shall  be  charged 
to  such  account. 

Skc.  1(1.  That  postmasters  of  postal  savings  bank  offices  shall  make  daily 
reports  to  the  Postmaster-Cieneral  of  all  sums  received  by  them  for  deposit, 
giving?  particulars  of  each  deposit  on  blanks  to  be  furnished  them,  and  upon 
receipt  of  such  reports  the  Postmaster-General  shall  transmit  to  the  depos- 
itor, under  cover  to  the  i)ostiiia>iti'r  making  the  report,  an  acknowledgment 
of  sucii  deposit.  Such  ackuowlcdtninnit  shall  be  conclusive  evidence  of  the 
claim  ol  rhe  depositor  to  the  repayment  f)f  the  deposit  on  demand,  with  any 
interest  that  may  have  been  allowed  and  entered,  and  until  such  acknowl- 
edgment is  received  the  entry  by  the  proper  officer  in  the  depositor's  pass 
book  shall  be  conclusive  evidence  of  the  title  as  respects  the  deposits  made. 

Sec.  11.  That  the  Postma.ster-Qeneral  may,  with  tho  advice  and  approval 
of  the  Secretary  of  the  Treiusury,  designate  such  United  States  de])ositories 
as  may  be  cunvcnient  for  the  postal  savings  bank  offices  and  for  the  Treasury, 
where  deposits  authorized  liy  this  act  may  be  made  by  postmasters. 

Sec.  12.  That  any  depositor  having  had  siaTidiiig  to  his  credit  for  six  months 
the  sum  of  fKK)  or  move  Tnay  make  application  to  the  Postmaster-General 
that  United  States  bonds  be  issued  to  hiiii  in  lieu  of  such  deposit;  thereupon, 
the  amount  specified  by  the  applicant  being  $100,  or  a  multijtle  thereof,  shall 
Ix'  transfi'rrcd  to  the  general  fund  of  the  Treasury,  and  bonds  of  the  denomi- 
nation of  JloO  i'iu-h  shall  be  issued  to  the  depositor  in  lieu  thereof,  one  bond 
for  each  ?100  transferred.  All  such  bonds  shall  be  of  the  denomination  of 
$100;  shall  be  due  and  payable  twenty  years  after  date;  shall  be  dated  July  1 
or  January  1  of  the  yearissued,  and  shall  bear  interest  at  the  rate  of  3  per 
cent  per  annum,  which  interest  shall  boc-orae  due  and  payable  on  the  SOth 
daj'  of  June  of  each  year;  and  such  bonds  shall  be  known  as  United  States 
pcstal  savings  bonds,  and  the  words  "United  States  postal  savings  bonds" 
shall  be  printed  upon  the  face  of  each  of  said  bonds. 

Sec.  V,i.  That  the  Postmaster-General  may.  in  his  discretion,  require  an  ad- 
ditional bond  ot  any  postmaster  of  a  postal  savings  btvnk  office,  provided  such 
bond  sliall  not  be  excessive  oi'  unreasonable  in  amount. 

Sec.  U.  That  the  Postmaster-General,  with  tho  con.scnt  and  approval  of 
tho  Secretary  of  tho  Treasury,  shall  make  the  necessary  regulations  and  pre- 
]>are  the  necessary  instructions  for  carrying  this  act  into  effect,  including 
regulations  regarding  the  deposits  and  withdrawal  of  deposits  by  minors  and 
trustees,  and  the  final  disposition  of  doyjosits  of  deceased  persons,  and  such 
regulations  and  inst"  ictions  shall  bo  binding  on  all  persons  to  the  same  ex- 
tent as  if  such  regulations  formed  part  of  tiiis  act;  and  the  Postmaster-Gen- 
eral may,  with  the  approval  of  the  Secretary  of  the  Treasury,  change  such 
regulations  from  time  to  time  as  may  be  found  necessary  to  secure  the  best 
administration  of  this  act;  and  the  Postmaster-General  shall  transmit  to 
Congi-oss  on  the  first  day  of  each  session  a  copy  of  all  regulations  made  and 
in  force  and  of  all  changes  made  subsequent  to  his  last  report,  and  the  rea- 
sons for  such  changes. 

Sec.  15.  That  tht;  Postmaster-General  shall  cause  to  be  prepared  and  printed 
all  necessary  books  and  blanks  required  to  carry  this  act  into  effect,  Hn<I  the 
Secretary  of  the  Treasury  shall  cause  to  be  prepared  the  requii-ed  bonds. 

Sec.  16.  That  tho  Postniaster-General  shall,  as  s(jon  as  practicable  after  the 
end  of  each  month,  make  a  report  to  the  Secretary  of  tho  Treasury  of  all 
moneys  received  and  paid  during  the  preceding  month,  and  tho  total  amount 
of  deposits  at  the  end  of  each  month,  and  such  report  shall  be  pulilished  by 
tho  Secretary  as  soon  after  the  close  of  the  month  as  is  practicable.  The 
Postmaster-General  shall  make  an  annual  report  of  the  total  amount  of  do 
posits  received  and  paid  and  the  total  amount  due  depositors  for  each  year 
ending  June  30;  also  of  all  expenses  incurred  and  such  other  particulars  and 
recommendations  as  ho  shall  deem  ncces.sary.  Such  annual  report  shall  be 
ti-ansmitted  to  Congress  upon  the  first  day  ot  each  regular  session. 

Sec.  17.  That  the  Postmaster-General  is  hereby  authorized  to  appoint  a 
superintendent  of  the  postal  savings  bank  dei)artment,  who  shall  be  paid  a 
salary  not  exceeding  §.5,0oOper  year,  and  who,  under  the  Postmaster-General's 
direction,  shall  have  charge  of  "the  postal  savings  bank  business,  and  the  Post- 
master-General shall  appoint  such  number  of  clerks  for  said  depavtment  as 
may  be  found  necessary  to  execute  this  law. 
1725 


maj 


OS' 

it  I 


The  Currency. 
SPEECH 

OF 

HON.   MAREIOTT   BEOSIUS, 

op  pennsylvania, 
In  the  House  of  Eepresentatives, 

TJiursday,  December  20,  1894- 

The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8149)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes — 

Mr.  BROSIUS  said: 

Mr.  Chairman:  I  submit,  and  with  entire  respect,  that  a  situa- 
tion must  be  very  unusual  which  presents  the  phenomena  we  wit- 
ness in  this  House  at  this  time.  A  great  public  measure  is  under 
discussion;  and  those  who  have  assumed  the  attitude  of  friendship 
toward  it  are  so  disunited  and  in  such  distinct  disagreement  with 
the  proponents  of  the  measure  that  whatever  they  may  say  in  pub- 
lic, in  private  they  do  not  conceal  the  fact  that  while  they  are  in 
favor  of  the  bill  they  are  opposed  to  every  section  of  it.  The 
situation,  therefore,  invites  reflections  which  do  not  emanate  from 
the  merits  of  the  measure  itself  so  much  as  they  do  from  the 
htimor  of  the  sit\Tation. 

1  have  observed  that  gentlemen  who  have  preceded  me  have  in- 
dulged in  observations  which  were  quite  aside  from  the  bill,  yet 
entirely  suitable  to  the  peculiarities  of  the  situation;  and  if  I  ex- 
press one  or  two  of  the  reflections  which  have  come  to  my  mind, 
I  would  ask  those  who  are  giving  me  the  honor  of  their  attention 
on  the  other  side  of  the  Chamber  not  to  think  for  a  moment  that 
I  mean  to  disparage  anyone,  anymore  than  my  friend  from  Ken- 
tucky [Mr.  Ellis]  did  last  evening  when  he  alluded  to  the  "  hypo- 
critical cant "  of  those  who  talk  about  the  fifty-cent  silver  dollar; 
or  than  my  friend  from  New  York  []\Ir .  Warner]  did  when  inform- 
ing us  how  we  could  escape  death  by  drowning  he  recalled  un- 
happy reminiscences  of  the  recent  drowning  experiences  of  some 
members  of  this  House;  or  my  friend  from  Missouri  [Mr.  Hall] 
yesterday  intended  to  shock  the  sense  of  rhetorical  propriety  of 
those  of  us  who  appreciate  and  love  the  beauties  of  rhetoric  wlaen 
he  alluded  to  that  remarkable  i)hysical  feat  of  dipi^ing  gold  with 
a  ladle  out  of  Cleopatra's  needle. 

SOME  REFLECTIONS. 

Now,  Mr.  Chairman,  the  reflection  that  comes  to  me  is  that  if 
a  majority  of  this  House  possess  the  same  superior  order  of  mental 
1730 


attrihiites  as  the  majority  of  the  Comuiittee  on  Banking  and  Cur- 
rency, then  tlie  stronger  tlie  evidence  we  submit  and  the  more 
convincing  ami  conclusive  the  argument  we  present  the  more 
likely  this  House  ^\^ll  be  to  pass  the  bill.  The  distinguished 
financiers  who  were  heard  by  the  committee  presented  a  remarka- 
ble unity  of  view,  and  supported  their  opinions  wnth  a  weight 
and  clearness  of  observation  which  amounted  to  absolute  dem- 
onstration of  the  dangers  of  the  bill  if  it  became  a  law.  And  yet 
in  the  face  of  all  this  clearness,  this  white  light  of  reason,  this  in- 
tellectual illumination,  the  committee  straightway  reported  the 
bill  to  the  House  ^\nth  a  favorable  recommendation. 

Now,  that  does  seem,  Mr.  Chairman,  to  confirm  the  theory  that 
the  human  mind  is  like  the  human  eye — the  more  light  you  throw 
upon  it  the  more  it  contracts.  I  think  in  one  of  George  Eliot's 
wctrks  there  are  some  comments  on  the  mental  characteristics  of 
the  donkey.  She  says  that  the  distinguishing  characteristic  of  a 
donkey's  mind  is  its  aptness  to  arrive  at  conclusions  inversely  to 
the  strength  of  the  evidence  and  the  conclusiveness  of  the  argu- 
ment. Arid  I  think  she  adds  that  it  argues  a  higher  intellectual 
acumen  on  the  part  of  the  donkey  than  the  direct  sequence.  I 
do  not  intend  any  reflection  upon  any  of  my  brethren  of  the  com- 
mittee, for  this  is  a  scientific  proposition,  and  science  never  reflects 
invidioiTsly  upon  anything  or  anybody,  but  it  leads  me  to  the  ob- 
servation that  whatever  effort  we  make  in  the  way  of  presenting 
arguments  against  this  measure,  however  clear  and  convincing 
and  conclusive  siich  argiunents  may  be,  if  our  minds  are  in  the 
sam0  fashion  superior  to  reason,  our  exertions  will  be  a  work  of 
supererogation  altogether. 

Mr.  SPRINGER.  Will  the  gentleman  allow  me  to  ask  him  a 
question? 

INIr.  BROSIUS.    With  the  gi-eatest  satisfaction. 

Mr.  SPRINGER.  I  wish  to  ask  my  friend  what  gentleman,  if 
any,  testified  before  the  Committee  on  Banking  and  Currency  that 
this  bill  would  bring  disaster  and  financial  ruin  to  the  country? 

Mr.  BROSIUS.  Why,  Mr.  Chairman,  if  my  friend  will  remem- 
ber, there  was  not  anybody  who  did  not  substantially  testify  in  that 
way — not  directly,  but  inferentially;  and  when  my  friend,  the 
chairman  of  the  committee,  received  one  letter,  one  little  stray 
lamb,  advocating  that  measure,  he  straightway  presented  it  to  the 
committee,  and  it  was  decided  not  to  put  it  into  the  Record. 

Mr.  SPRINGER.  Now,  I  wish  to  be  entirely  candid  with  my 
friend 

Mr.  BROSIUS.    Certainly;  you  are  always  candid. 

Mr.  SPRINGER.  Is  it  not  true  that  the  only  witness  who  stated 
that  this  bill  woiild  bring  financial  disaster  was  Mr.  St.  John,  the 
president  of  the  Mercantile  Bank  of  New  York? 

Mr.  BROSIUS.  I  quite  agree  with  my  friend  from  Illinois  that 
Mr.  St.  John  drove  a  larger  team  through  this  measure  than  any 
other  man  who  testified  before  the  committee;  and  let  me  add  that 
every  man  who  testified  before  the  committee,  with  possibly  one 
exception,  either  directly  or  by  clear  inference  declared  himself 
against  the  measure,  setting  forth  the  fact  that  the  passage  of  the 
bill  would  produce  calamity  of  one  degree  or  another,  not  all  of 
them  agreeing  upon  the  degi-ee. 

Mr.  SPRINGER.  I  want  to  ask  my  friend  if  it  is  not  true  that 
Mr.  St.  John  was  the  only  one  who  said  that  this  would  result  in 
disaster  or  produce  a  financial  crisis,  did  not  advocate  as  a  remedy 
1720 


the  remonetization  of  silver  on  a  basis  of  16  to  1,  and  he  admitted 
that  the  result  of  that  wonld  be  to  bring  us  to  a  silver  basis? 

Mr.  BROSIUS.  I  answer  again  by  saying  that  my  friend  is  un- 
doubtedly in  error.  I  have  stated  my  understanding  of  the  sub- 
stance of  the  testimony  submitted  to  the  committee,  and  I  think  I 
am  not  mistaken  in  my  vievv^s. 

CONFUSION  OF  TONGUES. 

After  listening  for  six  hours  a  day  for  six  conseciitive  days  to 
the  recitals  of  the  wise  and  otherwise  financiers  of  this  country, 
and  vn.tnessing  a  contrariety  of  view  as  to  what  constitutes  the 
best  bank  (though  they  were  perfectly  united  against  this  bill) 
that  well-nigh  extinguished  all  hope  of  arriving  at  any  conclusion 
which  had  not  as  many  witnesses  against  it  as  for  it,  I  think  one 
may  be  excused  if  he  is  reminded  of  that  notable  instance  of  the 
schemes  of  those  who  yield  to  the  solicitations  of  folly  coming  to 
grief,  when  the  Almighty  confounded  the  tongues  of  the  early 
tower  bviilders.  There  is  no  very  clear  reason  for  it,  but  it  has 
come  to  pass  that  those  who  have  undertaken  at  this  time  the 
work  of  revising  the  banking  system  of  the  greatest  nation  on 
earth,  have  incurred  the  disfavor  of  Providence  and  invited  a  con- 
fusion of  tongues,  whose  only  prototype  is  the  lingual  curse  of 
Babel.  To  vary  the  illustration,  the  money  question  seems  like  a 
wind  instrument  into  which  many  people,  not  here,  but  elsewhere, 
empty  their  lungs  instead  of  their  brains.  Each  perforation  of 
the  instrument  stands  for  a  distinct  note,  and  the  variety  of  ex- 
pression is  only  limited  by  the  length  of  the  scale.  The  quality  of 
the  music  covers  the  whole  gamut,  from  a  comic  song  to  a  divine 
symphony;  from  the  unintelligible  gibberish  of  the  untutored 
mind  to  the  articulate  iitterance  of  su]3erior  reason. 

The  distinct  admonition  iniplied  in  such  a  sitiiation  is  that  we 
should  abstain  from  any  legislation  upon  the  currency  question 
until  those  who  are  most  knowing  on  the  subject,  and  most  inter^ 
ested  in  it,  have  arrived  at  some  degree  of  unity  at  least;  until  we 
can  find  one  or  other  theory  in  whose  support  it  can  be  said  there 
is  a  preponderance  of  evidence. 

At  this  time  the  pendulum  of  opinion  on  this  vexed  question 
swings  over  an  unusually  long  arc.  At  one  end  is  the  scheme  of 
ptitting  the  Government  printing  presses  to  work  until  the  national 
debt  is  paid  in  brand  new  notes,  guaranteed  to  be  free  of  all  kinds 
of  contagious  or  infectious  diseases,  and  thereafter  the  Govern- 
ment to  loan  to  citizens  what  money  they  need  to  pay  their  debts 
at  2  j)er  cent  or  less;  and  at  the  other  is  the  exacting  demand  of 
those  who  are  only  happy  when  every  dollar  of  paper  money  is 
covered  by  one  in  gold  in  the  Treasury. 

These  extremes  represent  two  types  of  men  who  figure  in  human 
affairs.  One  feels  that  he  is  making  no  headway  unless  the  boiler 
is  ready  to  biu'st;  the  other,  that  there  is  no  safety  as  long  as  there 
is  a  drop  of  water  in  the  boiler.  Happily  there  is  a  middle  type 
and  a  middle  gTound  whereon  they  can  stand,  a  rock  of  recon- 
2iliation  on  which  men  of  "sweet  reasonableness"  can  embrace; 
and  the  command  of  the  hour  that  comes  to  us  as  clear  and  dis- 
tinct as  a  trumpet  call  is,  that  we  pause  until  reasonable  men  can 
unite  on  the  reasonable  middle  ground. 

THE  CAUSE  OF  OUR  TROUBLE. 

The  country  at  this  time  is  confronted  by  a  condition  to  meet 
which  the  Secretary  of  the  Treasury  proposes  a  theory  of  banking 
1720 


as  uinvisi'  as  the  condition  is  distressing.  The  existing  difificulty 
wa.s  not  ])rodneed  hy  any  defects  in  our  banking  system,  and  it 
can  not  be  remedied  i)y  any  of  the  proposed  amendments  thereto. 

Tlie  conspicuous  element  in  the  situation  which  plagues  the 
country  and  distresses  the  Secretary  of  the  Treasury  is  that  he 
can  not  keep  up  the  gold  reserve.  Institutions  and  indi\iduals 
are  constantly  presenting  paper  for  gold  redemption,  and  foreign 
exchange  is  at  a  rate  -which  makes  it  proiitable  to  export  gold 
rather  than  purchase  foreign  1)ills  of  excliange. 

Now,  Mr.  Chairman,  I  affirm  ^\^thout  any  hesitation  that  this  dif- 
ficulty is  distinctly  due  to  a  redundancy  of  currency,  a  dei)leted 
state  of  confidence,  diminished  rates  of  interest,  an  adverse  state 
of  trade,  and  insufficient  revenues,  and  has  no  more  coiinection 
with  our  banking  system  than  with  the  Turkish  massacre  of  Ar- 
mejiian  Christians.  The  difficulty  never  existed  coincidently  with 
confidence,  fair  rates  of  interest,  business  activity,  and  adcHjuate 
revenues,  and  the  natiiral  and  rational  remedy  is  the  restoration  of 
the  conditions  whose  presence  has  always  been  and  always  will  be 
inimical  to  the  prevalence  of  the  disease.  That  foreign  exchange 
is  so  strongly  against  us  and  the  supply  of  foreign  bills  so  short 
that  we  are  compelled  to  ship  gold  aliroad  to  iiay  balances  is  to  a 
large  extent  attributable  to  the  return  of  American  securities  and 
the  diminished  amoimt  of  foreign  investments  in  this  country  due 
to  loss  of  confidence  in  our  ability  to  redeem  all  our  obligations  in 
the  money  of  the  world. 

Superadded  to  this  is  the  amount  of  gold  Americans  spend  abroad 
every  year,  said  to  be  not  less  than  §90,000,000,  and  interest  on 
investments  in  this  country  held  abroad  $00,000,000,  !i;:50,000,000 
paid  for  foreign  freight  and  .$10,000,000  for  insurance  and  sundries, 
and  we  have  $190,000,000  of  obligations  against  the  country  inde- 
pendent of  anj'  commercial  transactions. 

How  can  any  man  free  from  mental  vertigo  see  any  connection 
between  these  conditions  and  our  banking  system?  If  it  had  any 
tendency  at  all  in  the  premises  it  would  be,  on  account  of  the  lim- 
ited amount  of  the  bank  issues,  distinctly  in  the  direction  of  relief 
rather  than  to  enhance  the  difficulty. 

THE    REMEDIES. 

But,  Mr.  Chairman,  I  am  quite  willing  to  eliminate  entirely  from 
consideration  the  obvious  causes  of  our  troubles  if  it  Avill  help  us 
to  determine  the  suitableness  of  the  pending  bill  as  a  measure  for 
relief.  Indeed,  it  may  be  conceded  that  in  diagnosing  a  gunshot 
wound  the  surgeon  does  not  need  to  know  whether  the  gun  was 
discharged  by  accident  or  design. 

I  desire,  then,  to  look  at  this  bill  in  reference,  first,  to  its  probable 
remediable  efficacy  in  the  present  situation,  and  secondly,  its  suit- 
ableness as  a  banking  system  independent  of  the  special  Treasury 
situation. 

The  first  postulate  to  which  I  invite  the  attention  of  the  House 
is  that  this  bill,  if  it  becomes  a  law,  will  intensify  the  difficulty 
rather  than  relieve  it.  The  bill  repeals  that  part  of  the  existing 
law  which  authorizes  the  deposit  of  United  States  bonds  to  secure 
circulation.  The  nioment  this  bill  becomes  a  law,  the  bonds  de- 
posited to  secure  the  $'-307,000,000  of  bank  notes  now  in  circulation 
lose  their  character  as  security  and  the  notes  have  nothing  behind 
them  but  the  assets  of  the  banks  which  issued  them  and  the  lia- 
bility of  the  stockliolders. 
1720 


Tlie  5  per  cent  redemption  fund  will  also  be  released  and  in  its 
stead  will  be  a  safety  fund  for  the  redemption  of  the  circulating 
notes  of  failed  banks,  made  up  of  one-fourth  of  1  per  cent  semian- 
nually on  the  average  amount  of  circulating  notes  outstanding,' 
and  will  require  ten  years  to  reach  the  5  per  cent  limit. 

The  shock  to  the  financial  world  produced  by  releasing  two  hun- 
dred and  twenty-five  millions  of  United  States  bonds  from  their 
present  custody  in  the  space  of  a  few  months,  and  throwing  a 
large  part  of  them  on  the  market  to  obtain  the  means  of  comply- 
ing with  the  deposit  requirement  of  this  bill,  and  the  confusion, 
alarm,  and  distrust  in  business  circles  as  a  consequence  of  this 
precipitate  transition  from  one  system  of  banking  to  another  so 
radically  different  and  requiring  a  greatly  diminished  security  for 
the  circulation,  hitherto  for  thirty  years  so  absokitely  saf e  that  no 
holder  ever  gave  it  a  thought,  may  produce  greater  evils  than 
now  exist. 

The  consequences  are  not  of  a  character  to  be  foreseen  and  esti- 
mated or  provided  against.  In  quiet,  steady,  and  prosperous 
times,  with  confidence  firm,  there  would  be  less  danger  to  appre- 
hend: but  in  a  season  of  extreme  sensitiveness,  after  a  severe 
attack  of  nervous  prostration,  we  are  quite  likely  to  take  alarm 
at  appearances,  and  if  a  reign  of  financial  terror  were  to  prevail 
no  man  can  place  a  limit  to  the  extent  or  forecast  the  duration  of 
the  financial  disturbances  that  might  ensue. 

But  supposing  this  is  a  mere  difficulty  of  the  mind,  the  child  of 
a  distempered  imagination,  as  some  of  you  may  believe,  and  the 
scheme  works  out  according  to  the  dramngs,  what  vdll  be  the 
extent  of  the  remedial  operation? 

HOW  IT  WORKS. 

If  all  the  national  banks  now  in  existence  come  under  its  opera- 
tion and  take  out  circulation  to  their  full  limit,  the  amount  of 
greenbacks  or  Treasury  notes  locked  up  and  made  inaccessible  to 
the  raiders  of  the  gold  reserve  would  be  about  $150,750,000,  and 
we  would  have  in  that  case  a  bank  circulation  of  $503,500,000.  an 
increase  of  the  volume  of  currency  of  nearly  $300,000,000  in  half 
a  year  in  bank  circulation  alone,  while  there  would  still  remain  a 
residue  of  greenbacks  and  Treasury  notes  of  $350,000,000  outstand- 
ing with  which  to  rifle  the  Treasury.  Mr.  Butler  in  his  testi- 
mony said  $1,000,000  of  legal  tenders  deliberately  worked  cotdd 
take  $100,000,000  of  gold  out  of  the  Treasury  in  any  year. 

This,  in  view  of  the  present  redundancy  of  money,  appalls  the 
mind  and  makes  us  wonder  what  sort  of  mental  strabismus  afflicts 
those  who  exploit  such  a  scheme.  But  that  is  not  all.  Under  the 
provision  of  this  bill  all  the  reserves  now  required  to  be  kept  by 
the  banks  are  released,  amounting  to  about  $105,000,000,  and 
turned  loose  to  range  at  will  over  and  commit  havoc  to  their 
hearts'  content  in  our  field  of  gold.  Here  is  another  inflation  of 
•.S15.000,000,  which  makes  a  total  possible  increase  in  our  paper  cir- 
•  •ulation  of  $315,000,000,  proAdded  you  gi  seethe  measure  at  once  its 
greatest  remedial  efficacy. 

But  supposing  the  scheme  works  less  violently,  and  only  half,  or 
less  than  half,  of  the  possible  circulation  is  taken  out.  Suppos- 
ing only  the  amount  of  $200,000,000,  or  about  the  present  amount 
of  bank  issue,  is  availed  of,  then  the  amount  of  the  deposit  w<:)uld 
be  $60,000,000,  while  you  release  $165,000,000  of  reserves.  That  is 
to  say,  you  lock  wp  $60,000,000  and  unlock  $165,000,000,  leaving  a 
1720 


6 

residue  of  §140,000,000  to  prey  upon  your  gold  reserve  thafyou 
are  trying  to  wall  up  by  a  scheme  as  vain  as  that  of  the  man  who 
built  k  fence  arotmd  his  cornfield  to  keep  the  crows  out. 
•  If  you  would  suggest  to  a  farmer,  as  a  remedial  m.easure  to 
save  his  sheep,  that  one  sheep  dog  be  chained  up  and  three  others 
just  as  bad  be  tmchained,  he  would  be  likely  to  ask  you  what 
State  you  came  from;  he  would  know  what  state  you  were  in. 

Now,  Mr.  Chairman,  these  two  situations  represent  the  low  and 
the  high  degree  of  remedial  efficacy  in  the  operation  of  this  law 
toward  the  end  proposed.  In  the  low  degree  the  only  efficacy  it 
has  is  to  produce  a  progressively  increasing  intensity  of  the  trouble, 
and  in  proportion  as  it  advances  toward  the  high  degree  the 
remedy  is  secured  at  the  cost  of  an  immense  inflation  of  our  bank 
currency.  The  latter  supposition  of  course  carries  the  implica- 
tion that  the  banks  w^ould  take  out  circulation  to  their  limit, 
which  they  woitld  not  do,  for  they  could  not  put  it  out. 

Mr.  TALBERT  of  South  Carolina.  It  would  give  us  more 
money. 

Mr.  BROSIUS.  Why,  my  friend  says  it  would  give  us  more 
money. 

Mr.'  TALBERT  of  South  Carolina.  I  ask  you  if  it  would  not 
give  us  more  money? 

Mr.  BROSIUS.  Why,  my  dear  friend,  we  are  swamped  in 
money  up  to  our  necks  to-day.  We  have  more  money  than  we 
know  what  to  do  with.  The  banks  in  the  cen.t(;rs  of  population  and 
business  are  full  of  money;  and  it  is  so  cheap,  there  is  such  an 
overplus,  my  friend,  that  it  does  not  bring  anything,  and  is  shipped 
abroad  for  the  interest  it  commands  there. 

Mr.  TALBERT  of  South  Carolina.  I  have  never  heard  of  it  be- 
fore.    It  is  news  to  me. 

Mr.  BROSIUS.  You  must  have  been  totally  deaf  to  the  discus- 
sions in  this  House  for  the  last  few  days  if  yoti  have  not  heard  of 
the  great  redundancy  of  money  in  this  country. 

Mr.  TALBERT  of  South  Carolina.    But  you  can  not  get  it. 

Mr.  BROSIUS.  Now,  Mr.  Chairman,  in  only  one  event  could 
the  results  I  have  described  suffer  any  mitigating  modification, 
and  that  wotild  be  in  case  there  was  a  surplus  of  revenue  with 
which  to  redeem  the  greenbacks  and  thus  prevent  an  increase  in 
the  volume  of  our  ciirrency.  This,  however,  is  a  consideration  so 
remote  as  hardly  to  be  a  factor  in  the  discussion. 

I  trust  I  have  shoAvn  how  utterly  abortive  the  measure  must 
prove  to  be  as  a  remedy  for  the  evils  which  afflict  the  Treasury, 
for  which  purpose  alone  the  Secretary  of  the  Treasury  is  pressing 
the  measm-e. 

REVISION  PREMATURE. 

My  other  postulate  is  that,  as  a  revision  of  our  banking  system, 
the  measure  is,  in  the  first  place,  premature,  and,  secondly,  if  revi- 
sion were  due  at  this  time  the  i)rovisions  of  the  bill  could  not  secure 
a  sttfiiciently  safe  and  elastic  bank  currency  that  would  satisfy  the 
people  of  the  United  States. 

On  the  first  part  of  this  proposition,  I  affirm  that  there  is  no 
occasion  at  this  time  for  a  general  revision  of  our  banking  system. 
Many  years  must  yet  elapse  before  our  bonded  debt  will  be  paid, 
and  indeed  every  jjresent  indication  points  to  an  increasing  rather 
than  a  diminishing  supply  of  this  l)asis  for  a  safe  circulation. 
The  chief  complaint  against  the  present  currency,  and  that  is  of 
recent  origin,  is  its  want  of  elasticity.  A  few  amendments  to 
1720 


the  existing  law  increasing  the  ratio  of  circulation  to  security, 
relieving  the  banks  of  the  burden  of  taxation  it  now  carries,  and 
keeping  a  supply  of  blank  notes  ready  for  delivery  on  application 
would  afford,  perhaps,  all  the  relief  necessary  at  this  time.  Fur- 
ther relief  might  be  obtained,  if  needed,  by  relieving  the  channels 
of  circulation  of  the  glut  of  inelastic  currency  by  redeeming  a 
portion,  not  the  whole,  of  the  $500,000,000  of  Government  paper. 
The  latter  relief,  however,  should  come  through  independent  legis- 
lation to  that  end;  it  is  no  part  of  a  banking  system. 

ELASTICITY. 

On  the  second  proposition,  the  total  inadequacy  of  this  measure 
as  a  revision  of  our  banking  system,  there  is  much  more  tx)  be 
said  than  I  can  hope  to  say  in  the  time  at  my  disposal  in  this 
debate. 

Mr.  TALBERT  of  South  Carolina.  Then  your  idea  is  to  de- 
stroy it. 

Mr.  BROSIUS.  The  requisites  of  a  suitable  bank  currency,  all 
agi'ee,  are  safety,  uniformity,  convertibility,  and  elasticity.  No 
man  can  say,  nor  does  any  man  say,  that  our  present  system  does 
not  supply  three  of  these  indispensable  requisites.  Safety,  uni- 
formity, and  convertibility  have  all  been  attained  in  ideal  per- 
fection. It  only  remains  to  secure  adequate  elasticity.  Is  this 
possible,  consistently  with  absolute  safety?  Some  insist  that  the 
two  qualities  are  so  incompatible  that  they  can  not  exist  coinci- 
dently.  If  this  is  true,  then  we  are  driven  to  elect  which  we  will 
have  at  the  cost  of  the  other.  When  such  an  alternative  is  pre- 
sented to  the  American  people,  they  will  not  be  long  in  pronounc- 
ing their  preference  for  safety. 

The  notion  that  safety  and  elasticity  are  incompatible  qualities 
proceeds,  in  my  opinion,  from  a  misconception  of  what  constitutes 
elasticity,  though  some  who  entertain  it  ought  to  be  well  advised 
on  the  subject,  and  weight  should  attach  to  their  statements. 

Mr.  Hepburn,  former  Comptroller  of  the  Currency,  is  quoted 
as  saying  at  a  bankers'  convention  recently  that  no  bank  note 
secured  by  stocks  or  bonds  could  possess  elasticity.  I  appeal  from 
Mr.  Hepburn  as  president  of  a  national  bank  in  1894  to  Mr.  Hep- 
burn as  Comptroller  of  the  Currency  in  1892.  In  his  report  in 
the  latter  year  he  says: 

Elasticity  means  conformity  to  business  wants,  the  supply  quickly  respond- 
ing to  the  demand.  The  national  banks  can  and  have  supplied  this  want  fully 
and  completely.  They  have  given  the  country  the  best  currency  and  the  best 
commercial  service  it  has  ever  had,  and  the  good,  solid  business  sense  of  the 
country  can  be  relied  upon  to  protect  and  preserve  the  system. 

That  is  what  Mr.  Hepburn  said  in  1892.  I  will  now  give  you 
what  my  distinguished  friend  [Mr.  Springer]  ,  the  chairman  of  the 
Banking  and  Currency  Committee,  said  to  us  in  1894,  this  year  of 
grace.  I  want  you  to  be  reminded  of  it.  I  want  my  friend  him- 
self to  be  reminded  of  it,  and  I  will  read  it  with  care.  The  subhead 
of  this  passage  of  his  speech  is :  "No  step  backward. "  [Laiighter .  ] 
This  extract  is  from  the  speech  of  the  distinguished  chairman  of 
the  Committee  on  Banking  and  Currency  made  upon  the  bill  to 
repeal  the  10  per  cent  tax  on  State  bank  circulation: 

After  thirty  years'  experience  with  a  national  currency  the  people  of  the 
United  States  will  never  consent  to  return  to  the  State  bank  issues  which 
prevailed  before  the  war.  They  were  the  best  issties  known  to  lis  at  that 
time,  but  they  often  produced  widespread  disaster  and  were  always  wanting 
in  uniformity  and  general  acceptability.  The  very  best  of  such  State  issues 
were  far  inferior  to  our  present  national  currency.  Why  should  we  give  up 
1730 


tliiit  whi<'h  is  coiu-iHk'd  to  be  ln'tti-r  and  return  to  that  wliich  nuist  be  admit- 
ted interior?  Let  us  hold  fust  to  that  whicli  is  always  jrood  ratluM-  than  re- 
turn to  that  whieli  was  sometinu^s  trood,  sometinu's  worthless,  and  always 
iusiirticient  and  uneertain.  To  return  aj^cain  to  Static  bank  eirrulation  would 
lio  like  diseardint;  our  palace  ears  and  troinj,'  1)aek  to  the  old  ('ouedrd  eoal•he^s 
of  fifty  years  ajjo;  like  abandoniiiL'-  our  nia^'nitieeiit  railways  for  the  old  Cnni- 
berlarid  dirt  earts  and  the  turnpikes  i)f  Ki-ntueky;  like  throwinu'asiil(' aniaui- 
iuothloeoniotive,  drawin.Lratrain  of  ahundriMl  ears,  for  the  '"])i"iirie  sehoonm-  " 
drawn  bvoxen:  like  diseai-dint;  the  fast  mail,  dashini,'  throuy:h  the  eountry  at 
»><)  miles"  an  hour,  for  the  solitary  horseman  i-irryin.ij:  the  mails  in  saddle- 
1  Mips  over  corduroy  roads  at  li  miles  an  hour.  In  my  Jtidpment  there  is  no 
more  reason  for  this  eountry  returning;  to  tlu'  polic.y  of  State  bank  curreTicy 
tlian  there  is  for  reestal)lisiiint;  slavery,  or  for  i)eacefully  permittinji;  the 
secession  of  any  State  of  the  I'nion.  The  dead  past  has  buried  its  dead,  and 
for  State  corporations  authorized  to  issue  circulating  notes  let  there  be  no 
resurrection. 

J  Applause.] 

So  say  I,  aiul  so  say  we  all. 

Mr.  TALBEK.T  of  South  Carolina.  Wise  men  change  their 
minds  sometimes. 

Mr.  BROSIUS.  I  am  willing  for  men  to  change  their  minds 
when  they  are  convicted  of  wi-ong;  but  I  do  not  like  to  see  them 
change  their  minds  when  they  are  convinced  they  are  right.  That 
is  the  troiible  with  some  people,  that  is  the  trouble  with  some 
members  of  the  House,  who  say  they  are  for  the  bill,  but  are 
against  every  section  of  the  bill.     [Laughter.] 

"The  elasticity  of  money,  Mr.  Chairman,  is,  I  say,  the  very  crux 
of  this  whole  matter. 

The  idea  of  it  is  variously  stated  by  different  writers,  but 
the  substance  of  it,  divested  of  imnecessary  verbiage,  is  that 
the  amount  of  circulation  adjusts  itself  to  the  needs  of  busi- 
ness, goin.g  out  when  needed  and  coming  in  when  the  need  is  past. 
To  put  out  notes  when  the  need  arises  requires  that  they  be  on 
hand  when  no  need  exists.  The  bank  must  be  oversupplied  when 
the  need  is  less,  in  order  not  to  be  undersupplied  when  the  need  is 
great.  This  involves  keeping  notes  idle  in  the  vaults  at  times, 
and  unless  the  bank  can  obtain  the  notes  on  conditions  which  will 
enable  tlieni  to  keep  them  idle  at  times  without  too  great  loss, 
elasticity  is  impossible.  The  situation  is  developed  in  the  follow- 
ing examination  of  Mr.  Butler,  president  of  the  National  Trades- 
man's Bank  of  New  Haven,  before  the  Banking  and  Currency 
Committee  the  other  day,  which  I  take  the  liberty  of  reading: 

Mr.  Biiositrs.  I  desire  to  bring  into  more  distinctive  view  your  thought 
upon  the  real  nature  of  the  difficulty  of  inelasticity  in  our  present  banking 
currency.  If  I  understand  you,  the  chief  difficulty  is  that,  in  order  to  have 
an  elastic  paper  currency,  the  banks  must  be  able  to  keep  on  hand  at  times  a 
greater  amount  than  is  needed,  in  order  to  have  it  to  use  at  other  times  when 
tlie  ne<'d  is  greater. 

Mr.  BuTi.ER.  Yes,  sir. 

Mr.  Bhosius.  The  portion  of  the  currency  which  the  banks  are  required 
to  hold  idle  must  not  cost  them  too  much.  Under  the  jjresent  system  you  say 
it  costs  the  bank  too  much  to  hold  any  amount  of  idle  notes  for  issue  when 
the  need  increa.ses. 

Mr.  TJuTr.EK.  That  is  correct. 

Mr.  Bkosius.  That  is  the  idea,  is  it? 

Mr.  BuTLKR.  Yes,  sir. 

Mr.  Bitosius.  Then  in  order  to  have  the  volume  of  currency  sufficiently 
elastic  the;  banks  must  get  that  currency  gratuitously;  they  can  notalfoi-d  to 
pay  anything  for  it.    Is  that  the  idea? 

Sir.  licTi.KH.  They  can  not  afford  to  pay  very  much  for  it. 

Mr.Buosius.  When  the  banks  issue  the  notes  themselves,  as  proi)osed  ia 
yf)ur  plan,  that  costs  them  nothing? 

Mr.  BuTt.Kit.  .Ko. 

Mr.  Buosirs.  Andwhon  the  notes  are  required  to  lie  idle  in  the  bank,  thei-e 
is  no  expenditure  to  the  bank? 

Mr.  BuTLKR.  That  is  correct. 
1720 


9 

Mr.  Brosius.  But  they  have  to  spend  a  part  of  their  capital  for  the  bonds 
to  secure  their  notes,  and  that  costs  them  too  much.    Is  that  the  idea? 

Mr.  Butler.  That  is  correct. 

Mr.  Brosius.  Now,  suppose  the  bonds  of  the  Government  were  sufficiently- 
abundant  to  be  obtainable  with  ease,  and  that  they  paid  a  sufficient  interest, 
so  that  the  banks  could  afford  to  hold  in  their  vaults  at  all  times  a  sufficient 
amount  of  currency  to  use  when  the  need  increased— you  understand  me?  , 

Mr.  Butler.  Yes.  sir. 

Mr.  Brosius  (continiiing) .  Without  any  loss  to  the  bank;  then  the  elasticity 
would  not  be  diminished,  because  the  currency  would  be  based  upon  Govern- 
ment bonds  as  security. 

Mr.  Butler.  On  the  condition  that  the  bonds  carried  the  rate  of  interest 
that  the  bank  must  make  on  its  loans,  and  only  on  that  condition. 

Mr.  SPRINGER.  Will  the  gentleman  allow  me  to  correct  one 
statement  that  he  has  made? 

Mr.  BROSIUS.     Certainly. 

Mr.  SPRINGER.  The  gentleman  has  assumed  that  I  am  in 
favor  of  going  back  to  the  State  bank  system  which  existed  before 
the  war.  I  desire  to  say  to  him  that  I  am  jnst  as  mnch  opposed 
now  to  going  back  to  the  system  which  prevailed  before  the  war 
as  I  was  when  I  made  the  speech  from  which  he  has  quoted. 

Mr.  JOHNSON  of  Indiana.  Now,  will  the  chairman  of  the 
committee  [Mr.  Springer]  permit  me  to  ask  him  a  question? 

Mr.  SPRINGER.  The  gentleman  from  Pennsylvania  has  the 
floor,  so  that  I  can  not  permit  an>'thing. 

Mr.  JOHNSON  of  Indiana.  Well,  will  the  gentleman  from 
Pennsylvania  permit  me  to  ask  the  chairman  of  the  committee  a 
question? 

Mr.  BROSIUS.    I  desire  to  reply  to  my  friend  [Mr.  Springer]  , 
who  has  undertaken  to  correct  statements  which  I  have  made.    I 
understood  that  my  friend  wanted  to  correct  a  misapprehension 
into  which  he  said  I  had  fallen. 
.  Mr.  SPRINGER.     Yes,  sir. 

Mr.  BROSIUS.  Now,  I  do  not  think  I  have  fallen  into  any 
misapprehension;  but  I  wish  to  direct  the  attention  of  the  House 
to  the  statement  made  by  my  friend  on  the  floor  but  a  few  months 
ago — within  the  year — and  I  wish  to  show  that  by  inference  those 
sentiments  sustain  the  views  that  I  am  advocating,  though  my 
friend  may  put  a  different  construction  upon  them. 

Mr.  SPRINGER.  I  am  as  much  opposed  now  to  going  back  to 
the  system  of  banking  which  prevailed  before  the  war  as  I  was 
then.  This  bill  does  not  propose  to  do  that.  I  stand  by  every- 
thing I  said  at  that  time. 

Mr.  BROSIUS.    I  am  most  happy  to  be  assured  of  that. 

It  is  thus  evident  that  elasticity  does  not  concern  itself  with  the 
source  from  which  the  notes  emanate,  nor  the  character  of  the 
security  behind  them,  provided  it  is  suifflcient,  but  only  about  the 
fact  of  their  presence  or  absence  when  needed.  The  authority  to 
issue  notes  and  the  incentive  to  do  so  result  in  the  act  of  issue. 
From  the  imion  of  power  and  profit  springs  elasticity.  Any  sys- 
tem of  banks,  whether  national  or  State,  which  have  authority  to 
issue  notes,  and  there  is  sufficient  incentive  in  the  profits  to  do  so, 
will  supply  an  elastic  currency.  The  note  in  bank  waiting  to  be 
used,  whether  it  is  issued  on  Government  bonds  or  against  the 
credit  of  the  bank,  goes  out  to  meet  a  demand  and  returns  when 
the  demand  ceases.  If  the  note  is  not  there,  because  the  bank 
could  not  afford  to  keep  it  in  waiting  or  for  any  other  reason,  the 
need  goes  unmet,  and  the  currency  is  inelastic  because  it  does  not 
adjust  itself  to  the  needs  of  business. 

1720 


10 

The  conditions  of  elasticity  may  be  present  in  a  bank  without 
any  circulation  at  all  if  its  deposits  supply  all  the  money  it  can 
use.  The  Mechanics'  National  Bank  of  New' York,  with  $30,000,000 
of  deposits,  needs  no  circulation.  There  is  always  money  on  hand  to 
meet  any  need  that  arises,  and  money  that  costs  them  nothing  they 
can  afford  to  hold  to  meet  the  coming  need. 

So  that,  and  the  conclusion  is  irresistible,  if  the  cost  of  carrying 
a  circulation  is  not  too  great  and  bonds  can  be  supplied  that  will 
yield  a  rate  of  interest  that  will  make  it  profitable  for  banks  to 
issue  notes,  they  will  be  issued  to  meet  the  demands  of  business  and 
we  Avill  have  an  elastic  currency  as  we  had  for  many  years  under 
our  present  national  banlring  law,  because  all  the  conditions  of 
elasticity  were  fully  met. 

Accordingly  we  find  that  all  the  complaints  of  the  inelastic 
quality  of  our  currency  spring  from  the  cost  of  bonds  and  the 
expensiveness  of  carrjnng  a  circulation,  together  with  the  fact 
that  inelastic  Government  issues  fill  the  channels  of  circulation 
to  the  exclusion  of  the  bank  issues. 

I  propose  by  amendments  to  relieve  these  onerous  conditions, 
that  the  currency  may  be  elastic,  and  any  further  revision  of  the 
national  banking  system  at  this  time  "cometh  of  evil  "to  the 
country,  and  I  am  opposed  to  it. 

Mr.  SMITH  of  Illinois.  In  addition  to  the  remedies  which  the 
gentleman  has  just  suggested  in  order  to  furnish  a  sufficiency  of 
currency,  would  he  object  to  stating  his  views  with  reference  to 
the  funding  of  the  outstanding  greenbacks  and  Treasury  notes 
as  atfor(^ng  some  additional  relief? 

Mr.  BriOSIUS.  I  ^vill  say  to  my  friend  from  Illinois  that  if  I 
had  time  I  should  be  glad  to  go  into  that,  but  it  is  not  a  part  of 
the  subject  that  I  had  intended  to  discuss,  and  if  I  should  take 
time  now  to  express  my  views  on  that  topic  I  should  be  compelled 
to  omit  some  things  that  I  would  much  prefer  to  say. 

Mr.  SMITH  of  Illinois.  Then  I  will  not  press  the  question,  of 
course. 

Mr.  BROSIUS.  I  will  say,  however,  in  passing  (not  to  be  dis- 
courteous to  my  friend) ,  that  I  am  not  in  favor  at  this  time  of 
redeeming  all  the  legal-tender  notes  by  a  new  issue  of  bonds.  I 
am  not  in  favor  of  converting  the  whole  of  them — §500,000,000  of 
noninterest-bearing  debt^into  $500,000,000  of  interest-bearing 
debt.  Yet  I  am  not  prepared  to  say  that  a  part  of  them  could 
not  be  profitably  redeemed  wnth  a  view  of  remedying  some  other 
distresses  that  probably  may  in  part  be  produced  by  the  great 
abundance  of  Government  paper.  And  in  this  connection  I  may 
say  that  the  fact  that  the  channels  of  circulation  in  this  country 
are  filled  up  to  a  considerable  extent  by  this  inelastic  Government 
paper  produces  one  of  the  difficulties  under  which  our  national 
banks  suffer  to-day, 

TWO  METHODS  OF  ISSUING  PAPER  MONEY. 

There  are  two  methods  of  putting  out  paper  money;  one  is  the 
Government  method,  the  other  the  banking  method.  In  the 
fomier  the  money  goes  out  in  pajTnent  of  an  obligation  with  no 
pro\'ision  for  its  return,  as  for  example  the  greenbacks  and  the 
Sherman  notes  of  1890.  In  the  latter  it  goes  out  in  loans  with  an 
accompanying  pro\'ision  for  its  return.  The  supply  needed  to  re- 
pay the  loans  at  maturity  ^vill  be  equal  to  the  amount  put  in  cir- 
culation, and  what  the  English  bankers  call  the  efflux  and  reflux 
will  be  equal. 

1720 


11 

Let  me  give  an  illustration  of  these  contrasted  modes  of  issuing 
paper  money. 

The  Farmers'  National  Bank  of  Lancaster,  Pa.,  issues  in  loans 
$50,000  on  sixty-day  paper.  While  the  money  is  out  the  Govern- 
ment buys  from  a  citizen  of  Lancaster  $50,00*)  worth  of  silver 
bullion.  There  wovild  be  thus  put  out  $100,000  with  a  counter 
demand  for  the  withdrawal  from  circulation  of  $50,000  only,  to 
meet  the  paper  maturing  in  the  bank,  the  demand  for  the  return 
being  equal  to  the  demand  for  the  issue,  while  the  $50,000  of  Gov- 
ernment paper  being  once  out  is  always  out,  for  it  is  accompanied 
by  no  provision  for  its  return  to  the  issuing  source. 

JOINT  LIABILITY  OF  BANKS. 

The  currency  we  now  have  is  absolutely  safe.  The  new  cur- 
rency may  be  practically,  but  not  ideally  so,  and  the  security  it 
will  enjoy  will  be  realized  by  all  honest  banks  standing  for  the 
defaults  of  dishonest  and  badly  managed  ones;  a  principle  of  in- 
surance which,  when  applied  to  banking,  is  so  vicious  that  the 
mind  revolts  at  its  contemplation.  It  is  difficult  to  believe  that 
national  banks  will  accept  such  an  onerous  condition  and  place 
themselves  in  the  grasp  of  so  vague,  indefinite,  and  illimitable  a 
liability.  If  they  do  so  and  there  happens  to  come  along  a  finan- 
cial cyclone  and  banks  begin  to  tumble  and  people  begin  to  trem- 
ble and  take  alarm,  there  would  be  a  run  on  deposits  as  certainly 
as  that  men  in  a  state  of  fright  seek  safety  for  themselves  and 
their  property. 

But  there  will  be  another  consequence  which  has  not  been  men- 
tioned that  I  think  ought  not  to  be  overlooked. 

The  effect  will  be  to  offei*  a  premium  for  mushroom  concerns 
conceived  in  fraud  and  operated  for  a  season  for  dishonest  gain, 
then  to  collapse  and  throw  the  losses  on  honest  banks.  Such  "wild- 
cat "  establishments  can  prosper  for  a  time  as  far  as  their  circula- 
tion is  concerned,  for  all  banks  of  issue  are  equally  good.  Men  of 
means  and  character  will  have  no  advantage  in  business  over  ras- 
cals, rakes,  and  renegades,  for  all  are  equally  protected.  Pirate 
crafts  are  given  the  same  rights  on  the  sea  as  honest  merchantmen. 
Reputation  and  rectitude  will  fall  to  the  level  of  "ne'er-do-wells, " 
and  knaves  for  the  law  will  clothe  them  all  in  one  livery  and  jjlace 
them  upon  an  equality,  and  the  inducements  to  deal  with  men  of 
known  honor,  probity,  and  property  for  your  own  security  wrill 
cease  to  operate,  for  the  circulation  issued  by  honest  men  will  en- 
joy no  advantage  over  that  issued  by  knaves  organized  for  plunder 
under  this  banking  law. 

For  example,  the  notes  of  the  Mechanics'  National  Bank  of 
New  York,  if  it  had  any,  with  a  surplus  and  undivided  profits 
of  $7,000,000,  with  an  annual  dividend  of  150  per  cent,  with  $30,- 
000,000  of  deposits,  its  stock  quoted  at  4300 — 43  times  its  par,  the 
notes  of  such  a  magnificent  institution,  which  by  the  rectitude 
and  skill  of  its  management  so  commands  public  confidence  that 
copious  streams  of  deposits  pour  over  its  counter,  supplying  it 
with  all  the  money  it  can  handle,  would  enjoy  no  advantage  over 
those  of  a  bank  organized  by  a  group  of  knaves  for  the  purpose  of 
plunder.  This  would  be  an  assault  upon  the  rights  of  honest 
men  and  a  menace  to  the  morals  of  the  people,  and  ought  to  invite 
the  disfavor  of  all  honest  men, 

STATE  BANKS. 

The  tenth  section  of  the  bill,  which  provides  under  certain  con- 
ditions for  the  repeal  of  the  10  per  cent  tax  on  State  bank  circula- 
1720 


12 

tioii.  opens  H  Pandora's  box  of  evils.  In  view  of  the  discrimina- 
tions in  tills  spftion  against  national-bank  circulation  it  seems  to 
me  the  bill  iniyht  have  been  aptly  entitled  "A  bill  to  provide  for 
the  gradual  extinction  of  the  national  banking  system."  The 
national  bank  must  pay  one-fourth  of  1  per  cent  tax  semiannu- 
ally upon  its  circulation  to  defray  the  expenses  of  the  Comptrol- 
ler s  department;  the  State  bank  pays  nothing. 

The  national  bank  pays  one-foiirth  of  1  per  cent  semiannually 
toward  a  safety  fund  for  the  redemption  of  the  notes  of  failed 
banks.  The  State  banks  are  exempt  from  this  tax.  All  national 
banks  are  liable  to  be  assessed  pro  rata  to  reimburse  the  depleted 
safety  fund,  making  national  banks  jointly  liable  for  the  defaults 
of  all  failed  banks;  no  such  liability  is  imposed  upon  State  banks. 
The  national  banks  are  forbidden  to  issue  notes  in  denominations 
less  than  §10.  States  banks  are  xanrestricted  in  their  right  to  issue. 
National  banks  under  the  existing  law  are  required  to  take  and  re- 
ceive at  par  the  notes  of  other  national  banks.  State  banks  un- 
der this  bill  are  not  required  to  receive  the  note  of  any  national 
bank  in  payment  of  any  liability. 

The  national  bank  is  required  to  accumulate  a  surplus  fimd  to 
be  set  apart  out  of  the  profits  of  business  until  it  reaches  one-fifth 
of  the  capital  of  the  bank.  No  such  requirement  is  imposed  on  the 
State  bank. 

The  national  bank  must  make  detailed  statements  of  its  condi- 
tion not  less  than  five  times  in  each  year  to  the  Comptroller  of  the 
Currency.  No  such  onerous  dut  j'  is  imposed  upon  the  State  bank. 
The  national  bank  is  required  to  make  report  to  the  Comptroller 
twice  a  year  of  the  dividends  declared  and  the  amount  of  their 
profits  in  excess  of  dividends.  No  such  duty  is  required  of  the 
State  bank.  The  national  banks  are  subjected  to  periodical  exam- 
inations by  expert  examiners  and  all  their  books,  accounts,  and 
securities  overhauled.  State  banks  are  subjected  to  no  such  in- 
quisitorial proceedings. 

Nationjil  banks  are  prohibited  from  loaning  more  than  a  tenth 
of  their  capital  to  any  person  or  corporation.  No  such  restriction 
is  imposed  upon  the  State  banks.  National  banks  are  prohibited 
from  making  any  loan  or  discount  on  the  security  of  their  capital 
stock.  No  limitation  of  that  land  is  imposed  upon  the  State  bank. 
The  national  banks  are  forbidden  to  pledge  any  of  their  circula- 
tion notes  for  the  purpose  of  procuring  money  for  any  purpose  in 
connection  with  the  bank.  No  such  restriction  is  imposed  upon 
the  State  bank. 

These  are  some,  but  not  all,  of  the  discriminations  which  this  bill, 
in  connection  with  the  existing  law,  makes  against  national  banks, 
and  I  have  entirely  omitted  many  penalties  imposed  for  infrac- 
tions of  the  law,  from  which  the  State  bank  will  enjoy  entire  im- 
munity. 

If  there  is  any  excuse  or  any  justification  for  these  invidious 
discriminations,  which  tend  to  limit  and  fetter  the  freedom  of 
movement  in  the  banking  business,  short  of  a  predetermined  pur- 
pose to  handicap  the  national  banks  as  means  of  afifor<ling  circu- 
lation for  the  i)eople.  it  is  too  remote  and  too  minute  to  be  dis- 
covered with  the  naked  eye;  and  it  seems  to  me,  when  your 
system  goes  into  operation,  that  our  national  banks,  weighted  by 
tliese  unequal  and  inequitable  burdens,  will  have  about  as  fair  a 
chance  in  the  field  -witJi  the  Stake  banks  as  a  splendid  Kentucky 
Hambletonian,  hitndicapped  on  the  track  with  a  road  wagon  weigh- 
1730 


13 

ing  a  tlionsand  or  two  tlionsand  pounds,  would  have  in  a  race  with 
a  Mexican  broncho  under  the  saddle;  and  I  am  opposed  to  any  such 
strantyulation  of  the  national  banks  of  this  country. 

So  that,  if  this  legislation  prevails,  it  means  a  State-bank  circu- 
lation, with  all  that  that  implies  in  the  way  of  the  insecurity, 
confusion,  disaster,  and  ruin  which  has  punctuated  the  entire  his- 
tory of  State  banking  in  the  United  States.  Past  experience 
shows  that  good  intentions,  and  even  good  laws  unexecuted,  will 
not  maintain  safe  banking  institutions. 

CURRENCY  MUST  BE  ABOVE  SUSPICION. 

After  enjoying  for  thirty  years  a  currency  above  suspicion,  the 
people  will  not  voluntarily  accept  a  less  safe  medium  of  exchange. 
They  insist  upon  money  that  enjoys  absolute  immunity  from 
danger.  It  must  be  superior  to  accident  or  chance.  It  must  not 
require  argument  or  arithmetic  to  demonstrate  its  safety.  Yet 
we  are  now  engaged  in  trying  by  comparisons,  calculations,  and 
conjectiTres  from  past  experiences  to  prove  the  proposed  currency 
safe.  This  fact  proclaims  the  danger.  The  necessity  for  your 
arguments  and  the  opinions  of  many  wise  people  expose  the  very 
danger  you  are  trying  to  conceal.  When  you  debate  the  safety 
of  money  it  becomes  debatable.  If  it  is  questioned  by  some,  it 
will  be  suspected  by  all.     To  doubt  money  is  to  damn  it. 

The  present  bank  currency  has  stood  all  these  tests.  The  holder 
never  suffers  disquietude;  he  eats  well  and  sleeps  well,  and  enjoys 
perfect  tranquillity  of  mind  as  far  as  his  money  is  concerned.  No 
fact  could  shed  greater  luster  upon  our  banlring  system  than 
that,  with  a  total  issue  exceeding  $1, 500,000,000  in  the  last  thirty 
years;  no  holder  of  any  part  of  that  enormous  sum  has  ever  lost 
a  farthing;  an  excellence  so  superb  and  unique  as  to  realize  the 
paradox  that  the  note  of  a  broken  bank  is  just  as  good  as  that  ol' 
a  sound  one. 

Place  beside  the  iinrivaled  system  which  produces  such  splen- 
did results  some  of  the  schemes  of  banking  exploited  by  so-called 
financiers,  which  provide  for  money  coming  home  to  the  source 
of  issue  by  depriving  it  of  the  character  that  would  keep  it  abroad 
on  the  distinct  ground  that  the  more  local  it  is  and  the  more 
limited  the  range  of  the  confidence  it  commands  the  quicker  it 
would  return  for  redemption,  suggesting  the  paradox  that  the 
worse  money  is  the  better  it  is,  and  the  better  it  is  the  worse  it  is 
as  a  circulating  medium.  Place,  I  say,  these  systems  side  by  side. 
and  we  witness  the  contrast  between  good  and  bad,  light  and 
darkness,  angel  and  devil. 

And  now,  Mr.  Chairman,  I  see  the  hour  is  approaching  for  the 
exei-cises  to  be  held  under  the  special  order.  There  are  many 
things  that  I  would  like  to  say,  but  I  shall  conclude  my  remarks 
by  expressing  the  hope  that  this  abortive  measure,  this  "bill  of 
pains  and  penalties  "  to  the  financial  interests  of  the  country,  this 
child  of  headlong  haste  and  unexampled  precipitancy — 

Deformed,  iinflnished,  seut  before  its  time 

Into  this  breathing  world,  scarce  halt  made  up — 

will  not  prevail. 

THE  LEGISLATIVE  SITUATION. 

Gentlemen  of  the  other  side  the  chamber,  let  me  say  a  word  in 
all  kindness.  I  w^ould  have  you  pause  long  enough  to  realize  the 
situation. 

After  a  deliberate,  dispassionate,  and  searching  inquisition  be- 
fore the  bar  of  public  judgment  in  this  coimtr.y  on  all  the  great 


14 

issues  touching  the  welfare  of  the  country,  as  well  as  the  steward- 
ship of  tlie  i^arty  that  has  been  charged  with  the  responsibility 
of  govenimt'ut,  where  every  voice  was  hoard,  every  accusation 
weighed,  and  every  defense  considered,  and  after  the  deliberate 
judgment  of  the  American  people,  pronounced  with  overwhelming 
preponderance  in  condemnation  of  the  principles,  policies,  and 
practices  of  the  party  now  in  power;  after  a  decisive  and  crushing 
vote  by  the  people  of  the  United  States  of  an  absolute  want  of 
confidence  in  the  legislative  capacity  of  this  Congress,  in  de- 
fiance of  this  explicit  and  distinct  command  of  your  masters — 
while  you  are  waiting  the  execution  of  the  sentence  of  deposition 
from  power  you  are  engaged  in  a  legislative  task  for  which  the 
judgment  of  the  country  has  declared  yon  totally  incapable. 

What  stupendous  insensibility  you  betray  to  the  obligations  of 
obedience  to  your  master's  will;  what  astounding  temeiity  you 
exhibit  in  thus  defying  the  judgment  of  that  mighty  American 
tribunal  which,  without  visible  session,  is  constantly  uttering 
its  decrees,  and  withoiit  marshal  or  constable,  or  army  or  navy,  is 
constantly  executing  its  sentences.  So  I  ask  you  to  pause,  con- 
sider where  we  are  and  what  we  are  doing,  and  not  allow  your 
better  judgment  to  jield  to  the  solicitation  either  of  friendship  or 
party  unity,  or,  what  is  worse,  the  lash  of  the  Executive  overseer. 
Do  not  place  yourselves  in  the  conipromising  attitude  toward  this 
Administration  that  the  Duke  of  Wellington  did  toward  the  Peel 
administration  when  he  said: 

If  it  is  required  by  the  exigencies  of  your  administration  I  unhesitatingly 
recommend  the  measure,  for  I  have  no  object  in  public  life  but  to  support 
your  administration  of  the  Government. 

Believing  that  you  will  not  imitate  such  an  example,  I  am  will- 
ing to  take  my  leave  of  the  subject;  and  as  I  desire  my  last  words 
to  be  in  eulogy  of  this  great  banking  system  which  you  propose 
to  emasculate,  to  strangle  and  kill  after  the  benefits  it  has  con- 
ferred upon  the  country,  I  beg  to  repeat  what  I  have  said  else- 
where. After  thirty  years  of  such  a  currency  it  seems  to  me 
that  all  provincial  schemes  of  finance,  all  local  currencies,  and 
State-bank  notes  are  absolute  anachronisms.  In  an  age  of  steam 
and  electricity,  when  intelligence  flies  on  electric  wing  and  all 
your  commodities  are  transported  with  a  speed  and  safety  only 
possible  to  the  marvelous  instrimientalities  of  our  day,  com- 
merce and  currency  are  twin  sisters,  living  and  jotirneying  in 
loving  companionship;  whither  one  goes  the  other  must  go  also. 
Where  ships  sail,  steamers  ply,  or  cars  run,  over  all  the  broad 
waterways  and  roadways  of  the  land  on  which  the  exchanges  of 
the  country  are  flying  to  and  fro,  like  mighty  shuttles  weaving 
the  wondrous  web  of  interstate  commerce,  there  must  the  nation's 
currency  be  current  every  hour  of  the  day  and  every  day  in  the 
year.  The  bank  note  that  pauses  at  a  river's  brink  for  discount  or 
about  faces,  for  fear  of  insialt,  at  a  State  boundary,  is  a  ragged 
tramp,  a  limping  vagabond,  that  will  only  bring  disgrace  "^^ 
reproach  upon  this  grand  imperial  Republic.     [ApplaiiseJ 

1720 


THE  REPRESENTATIVES  OF  THE  PEOPLE  MUST  BE  PATRIOTS 
BEFORE  THEY  ARE  PARTISANS. 


THE    CURRENCY. 


SPEECH 


HON.  MARRIOTT  BROSIUS 


OF    PENNSYLVANIA. 


HOUSE  or  EEPEESENTATIVES, 


WEDNESDAY,  FEBRUARY  6,  1895. 


\V"A.siiiisr<3Toisr. 
1895. 


SPEECH 

OF 

HON.  MAERIOTT  BEOSIUS. 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8705)  authorizing  the  Secretary  of 
the  Treasury  to  issue  bonds  to  maintain  the  gold  reserve,  and  to  redeem  and 
retire  United  States  notes,  and  for  other  purposes — 

Mr.  BROSIUS  said: 

Mr.  Chairman:  The  members  of  the  Banking  and  Currency 
Committee  will  bear  me  out  when  I  say  that  we  made  a  strenu- 
ous effort  to  report  to  the  Hoiise  a  bill  that  would  meet  with 
some  favor.  That  it  has  not  been  a  shining  success  is  too  obvi- 
ous to  need  to  be  stated.  The  diversityof  views  presented  on  the 
measure  yesterday  emphasized  an  observation  that  all  make  daily, 
that  there  are  two  classes  of  people — one  who  think  that  there 
is  no  headway  to  be  made  unless  the  boiler  is  ready  to  burst,  and 
the  other  that  there  is  no  safety  in  proceeding  at  all  if  there  is  a 
drop  of  water  in  the  boiler. 

It  may  be  well  in  this  case  to  avoid  extremes.  There  is  a  mid- 
dle ground  whereon  reasonable  men  can  stand.  I  am  not  sure 
that  the  distinguished  gentleman  from  Maine  [Mr.  Reed]  in  the 
proposition  submitted  by  him  on  yesterday  did  not  place  himself 
firmly  upon  that  middle  ground  whereon  men  of  reasonableness 
can  embrace,  although  individually  I  would  like  to  take  hold  of 
the  situation  with  a  little  firmer  hand. 

The  situation  is  peculiar.  The  United  States  Treasury  is  sick; 
it  is  in  distress;  the  white  flag  is  up.  Shall  this  House  pass  by  on 
the  other  side  like  the  priest  and  Levite,  or  shall  we  like  the  good 
Samaritan  render  help?  It  is  my  deliberate  judgment  that  assis- 
tance should  be  proffered  at  once,  and  this  Congress  will  die  in 
disgrace  if  it  does  not  do  something  to  relieve  the  distress  of  the 
situation.  It  does  not  matter  what  causes  produced  the  dilemma, 
by  what  route  we  arrived  in  the  "  dismal  swamp  "  of  danger  and 
distress;  it  is  our  plain  duty  to  get  out  of  it  if  we  can.  The 
majority,  charged  with  the  responsibility  of  government,  seem 
unable  to  meet  the  exigency  with  suitable  legislation.  It  results 
that  withoiTt  the  aid  of  the  minority  inaction  will  continue  until 
the  4th  of  March. 

A  situation  of  that  kind  must  make  every  member  of  this  House 
sensible  of  the  claims  his  country  has  upon  him,  and  of  the  duty 
which  imposes  its  command  upon  him  to  assist,  at  least  not  to 
hinder,  the  majority  from  doing  the  best  they  know  how  to  do  to 
relieve  the  situation,  provided  the  mode  of  relief  proposed  is  free 
from  danger  to  any  public  interest. 

1804  3 


THE  SITUATION. 

What  is  the  situation?  We  are  descending  an  incline,  at  the 
bottom  of  which  yawns  a  chasm  of  financial  disaster  the  extent 
and  duration  of  which  no  man  can  forecast.  We  are  half  way 
down,  and  are  moving  at  a  progressively  accelerating  speed. 

Our  revenues  are  inadeiiuate  to  meet  our  expenditures,  and  our 
gold  reserve  is  rapidly  shrinking,  and  would  most  likely  have  been 
entirely  exhausted  before  this  had  it  not  been  replenished  by  an 
increase  of  our  indebtedness  of  $100,000,000. 

The  Treasury  is  the  onlj'  place  where  gold  redemption  Is  com- 
pulsory, and  is  the  only  custodian  of  gold  which  is  without  means 
of  protecting  itself  against  incursions  from  foreign  claimants  or 
domestic  hoarders  and  s]ieculators.  Its  necessities  force  it  to  pay 
gold  on  demand  without  means  under  its  control  of  replenishing 
the  supply.  As  the  stock  diminishes  the  rush  to  get  what  remains 
increases,  for  a  deficit  in  the  reserve  clouds  the  credit  of  the  notes 
that  rest  upon  it.  There  is  a  widespread  apprehension  that  we  are 
approaching  a  crisis.  Tliis  condition  of  alarm  induces  hoarding, 
especially  by  the  great  corporations  whose  loans  are  held  abroad, 
and  who  are  antic-ipating  the  contingency  of  having  to  pay  a  pre- 
mium on  gold  to  liquidate  their  obligations;  and  also  by  the  banks, 
which  have  large  and  increasing  holdings  of  gold  over  against  any 
exigency  tliat  maj'  happen,  and  private  individuals  seized  with 
fi-ight,  and  speculators  inspired  with  hope,  are  gathering  gold  and 
making  special  deposits  over  against  the  day  of  misfortune  on  the 
one  hand  and  opijortunity  on  the  other.  This  hoarded  gold  will  be 
released  when  the  present  doubt  is  dispelled  and  it  is  established 
that  there  will  be  no  premium  on  the  yellow  metal. 

EXODUS  OF  GOLD. 

Bearing  upon  the  problem  we  have  for  solution,  and  illustrating 
the  accelerated  process  of  depleting  our  gold  reserve,  I  attach  to 
my  remarks  the  follo\ving  statements: 

statement  of  net  gold  in  the  Treasw-y  in  the  years  named. 

Net  gold  in  Treasury  January,  1889 $194,6.55,264 

Net  gold  iuTrcasurV  Jiiiiuarv.lWW 177, 3H(),  :>85 

Net  gold  in  Treasury  .Tanuary.  1891 141,7:^8,097 

Not  gold  in  Treasury  .Tanuary,  1M93 119,574,904 

Net  gold  iu  Treasury  January. 1893 108,181,713 

Net  gold  in  Trea.sury  January,  1894. 65,050,175 

Net  gold  iu  Treasury  .January,  1895 44,705,967 

This  statement  shows  the  rate  of  speed  at  which  the  Treasury 
in  the  last  seven  years  has  descended  into  low  southern  latitudes 
in  finance.  "Easy  is  the  descent  into  hell"'  in  more  senses  than 
one. 

REDEMPTION. 

United  States  notes  and  Treasury  notes  redeemed  in  gold  by  calendar  years. 


Year. 

United 
States  notes. 

Treasury 
notes. 

Total. 

1879 

§11,456,536 
54;^,  800 
28.750 
115,000 

$11, 4.56,  .5.36 

1880 

54;},  800 

1881 

28, 750 

1883 

115,<J00 

1883 

1884 

810,000 
2,927,400 
9,  .349,  .507 
1,339,945 

810,000 

1885 

2,927.400 
9, 349;  507 

1886. 

1887... 

1,339,945 

1804 


United  States  notes  and  Treasury  notes  redeemed  in  gold,  efc— Contiinied. 


Yeai". 


United 
States  notes. 


1888 

1889. 

isfin... 

18<I1 

1892... 

1893 

1894 

1895  (to  February  3) 

Total 


$475, 

959. 

339, 

9,016. 

15,963, 

44, 493, 

133,941, 

43.414. 


265,174,409 


Treasury- 
notes. 


$686,870 

20.296,747 

33, 062, 778 

17,  S04, 045 

1.634,825 


73,475,265 


Total. 


76: 

141 

45, 


S475.181 
959,5-48 
339,273 
703,597 
260,560 
556,290 
745,104 
039, 183 


837,649,674 


It  will  be  observed  from  the  foregoing  statement,  and  it  is 
worthy  of  note,  that  from  January  1,  1879,  to  January  1,  1893,  a 
I)eriod  of  thirteen  years,  there  was  withdrawn  from  the  Treasury 
about  $38,000,000  on  account  of  the  redemption  of  greenbacks  and 
Treasury  notes.  While  in  the  single  year  of  1894  nearly  $142,- 
000,000  were  redeemed,  and  in  the  single  month  of  January  of 
this  year  more  gold  was  drawn  from  the  Treasury  in  the  redemp- 
tion of  legal-tender  notes  than  in  the  thirteen  years  from  January 
1, 1879,  to  January  1,  1892.  The  difference  in  industrial,  financial, 
and  commercial  conditions  in  the  two  periods  accounts  for  the 
difference  in  the  rate  of  gold  redemption  and  depletion.  In  the 
former  period  notes  were  employed  in  effecting  exchanges,  in  the 
course  of  business;  general  confidence  prevailed,  gold  was  not 
wanted  at  home  or  abroad,  and  never  is  when  confidence  exists 
and  business  is  active,  people  employed  and  money  in  use;  but 
when  business  is  suspended,  consumption  diminished,  people  idle, 
enterprise  crippled,  and  money  redundant  for  lack  of  use,  and  con- 
fidence is  succeeded  by  doubt  and  distrust  as  in  the  latter  period, 
gold  is  sought  and  obtained. 

WHERE  THE  GOLD  GOES. 

What  became  of  all  the  gold  we  have  lost  is  not  easy  to  deter- 
mine, though  we  can  account  for  much  of  it.  Our  indebtedness 
abroad  is  large,  exceeding,  it  is  said,  $2,000,000,000,  and  our  in- 
terest account  has  not  been  less  than  $80,000,000  for  some  years. 
Americans  are  supposed  to  spend  abroad  annually  nearly  $100,- 
000,000.  We  are  supposed  to  pay  $40,000,000  for  foreign  freight 
and  insurance,  making  an  aggTe,gate  of  $220,000,000. 

In  1894  we  had  a  good  trade  balance,  amounting  to  $152,294,824; 
our  net  shipment  of  gold  abroad  was  ,$81,200,351  and  of  silver 
$36,540,194,  making  a  total  of  $270,000,000  in  round  numbers,  which 
we  have  sent  abroad  in  excess  of  what  we  received. 

When  we  consider  in  connection  with  these  figures  that  the 
Treasury  lost  last  year  $141,745,104,  it  is  entirely  obvious  that  all 
this  vanishing  gold  did  not  go  abroad. 

In  the  months  of  November,  December,  and  January  last  the 
withdrawals  of  gold  from  the  Treasury  on  accoimt  of  United 
States  notes  and  Treasury  notes  of  1890  amounted  to  $84,746,069, 
while  the  shijiments  abroad  in  the  same  three  months  amounted 
to  $36,230,602,  showing  an  excess  of  withdrawals  over  exports  of 
1804 


§4S. 51 .1.467.    I  attach  here  an  official  statement  covering  the  with- 
drawals and  export  in  the  last  three  months. 

Witliilraicah  from  Treasury  on  account  of  United  States  notes  and  Treasury 
notes  of  IS'JO. 

November,  1894 87.709,747 

December.  1894 31,907,139 

January,  1895,  to  February  3 45,039,183 

84,746,069 
Exports  of  gold. 

November,  1894 §428,213 

December,  1894 9.8il2,.389 

January,  1895 26,00O,CX10 

36,230.603 

Excess  of  withdrawals  over  exjiorts 48,  .515, 467 

On  what  particular  account  the  gold  leaves  us  it  is  difficult  to 
say.  "What  amount  of  foreign  funds  have  been  called  home  from 
the  money  centers  of  this  country  because  they  no  longer  find 
use  on  account  of  the  redundancy  of  our  money;  what  amoiintof 
stocks  and  bonds  of  our  great  railroad  and  industrial  corporations 
have  been  returned  on  accouiit  of  the  cloudiness  of  our  financial 
situation;  what  amount  of  Western  mortgages,  State  and  munici- 
pal bonds  held  abroad  haA'e  matured  and  been  paid,  I  do  not  know. 

It  is  stated  that  $7,000,000  was  sent  to  London  recently  to  meet 
the  maturing  bonds  of  the  State  of  Massachusetts,  but  in  the  gen- 
eral murkincss  of  the  subject  it  is  not  safe  to  even  conjecture 
what  amount  of  our  gold  has  gone  abroad  or  what  amount  is 
hoarded  at  home.  It  is  not  unlikely  that  misers  and  speculators 
are  putting  away  large  sirrns.  If  we  could  open  the  private  boxes 
in  the  banks  and  the  secret  places  in  the  homes  of  the  people,  I 
have  no  doubt  large  amounts  of  the  yellow  metal  woiild  be  found. 
I  heard  of  one  man  offering  a  bank  $150,000  in  gold  as  a  special 
depo.sit,  which  to  the  great  credit  of  the  bank  it  declined  to  receive. 

Discouraging  as  the  situation  is,  some  comfort  can  be  extracted 
from  it.  The  foreign  obligations  we  have  paid  will  not  have  to  be 
paid  again.  The  gold  that  liquidates  a  foreign  debt  puts  it  out  of 
the  way,  and  it  will  not  return  to  plague  us.  The  consolation, 
however,  derived  from  this  consideration  in  no  sense  saves  us 
from  the  mortification  of  having  so  conducted  our  financial  affairs 
as  to  produce  the  'vs'idespread  doubt  and  distrust  which  has  caused 
the  movement  of  gold  from  our  shores. 

Now,  Mr.  Chairman,  it  is  too  obvious  to  need  to  be  stated  that 
a  situation  of  this  kind  requires  the  steadying  hand  and  reassur- 
ing voice  of  the  Congi'ess  of  the  United  States,  declaring  in  di-s- 
tinct  and  unequivocal  terms  its  determination  to  stand  guard  over 
the  Treasury  of  the  Repul)lic  and  its  financial  system,  to  sup]>ort 
and  sustain  its  credit  at  all  times  and  under  all  circumstances 
by  appropriate  legislation. 

FUNDAMENTAL  PROPOSITIONS. 

Two  propositions  are  fundamental.  We  must  maintain  our 
gold  reserve,  and  we  must  provide  the  means  of  paying  the  ex- 
penses of  the  Government. 

No  man  will  dispute  with  me  the  propositions  that  the  obliga- 
tions of  the  Government  must  be  paid,  the  financial  honor  of  the 
United  States  must  be  maintained,  the  commercial  credit  of  this 
Republic  must  be  kept  above  suspicion,  and  all  kinds  of  currency 
in  the  people's  use  must  be  kept  at  a  parity  with  the  best. 

1804 


The  first  requirement  might  be  met  to  some  extent  by  requiring 
one-half  the  duties  on  imjiorts  to  be  paid  in  gold,  and  I  would 
favor  so  amending  the  bill.  I  see  no  objection  to  it.  It  would  not 
be  a  discrimination  against  other  money,  but  would  be  paying 
equal  honor  to  both.  It  may  be  said  with  some  truth  that  those 
who  take  legal  tenders  to  the  Treasury  and  demand  gold  in  ex- 
change discriminate  against  the  paper  money  they  surrender.  To 
meet  that  discrimination  the  Treasury  is  compelled  to  replenish 
the  reserve.  The  only  means  of  doing  this  under  existing  law  is 
by  the  sale  of  bonds,  and  this  bill  proposes  no  other  means. 

Mr.  BRYAN.    May  I  ask  the  gentleman  a  question? 

Mr.  BROSIUS.     With  pleasure,  if  in  the  line  of  my  argument. 

Mr.  BRYAN.  I  only  caught  a  part  of  what  the  gentleman  said 
a  moment  ago.  Do  I  understand  you  to  insist  that  there  should 
be  sufficient  gold  kept  in  reserve  for  the  redemption  of  any  kind 
of  Government  paper,  silver  certificates  as  well  as  Treasury  notes? 

Mr.  BROSIUS.     I  have  not  said  that. 

Mr.  BRYAN.    Do  you  believe  that? 

Mr.  BROSIUS.  I  wiU  not  answer  that  question  now.  It  is  not 
involved  in  this  discussion,  and  I  do  not  care  to  go  into  it.  It  is  not 
a  practical  question  now.  I  am  quite  clear  in  my  mind  that  we 
should  go  a  certain  length,  and  I  am  endeavoring  feebly  to  pre- 
sent my  views;  and  when  the  silver-certificate  question  comes  up 
I  will  give  careful  attention  to  it. 

I  was  observing  when  my  friend  from  Nebraska  came  in  that  a 
suitable  means  of  replenishing  our  gold  reserve  would  be  to  re- 
quire one-half  of  the  duties  on  imports  to  be  paid  in  gold,  and  I 
was  observing  that  following  that  method  of  replenishing  our 
gold  reserve  was  not  dishonoring  or  discriminating  against  any 
portion  of  our  money,  becaiise  it  really  bestows  equal  honor  upon 
both. 

Excluding  this  mode  of  relief  there  are  but  two  ways  known  to 
honest  people  of  doing  these  two  indispensable  things — one  is  to 
raise  sufficient  revenue  by  customs  or  taxes,  and  the  other  is 
to  borrow  what  we  need  to  meet  the  demands  of  our  gold  reserve 
and  those  of  our  creditors. 

The  former  and  natural  and  customary  means  of  supplying  the 
needs  of  Government  meets  with  the  disfavor  of  the  majority,  and 
it  need  not  therefore  be  considered  in  this  connection  except  to  say 
that  in  my  judgment  the  deficiency  in  the  revenue  is  the  chief  sin- 
ner in  the  comedy  of  errors  which  has  brought  us  to  our  present 
unhappy  pass.  If  we  had  an  abundant  revenue  there  would  be  no 
occasion  to  pay  out  the  legal-tender  notes  that  are  redeemed  and 
they  would  remain  harmless  in  the  Treasury  until  such  times  as 
they  could  be  paid  out  without  danger  of  being  used  to  embarrass 
the  Treasury. 

Mr.  BRYAN.    Will  the  gentleman  permit  a  question? 

Mr.  BROSIUS.     Certainly. 

Mr.  BRYAN.  I  believe  that  the  amount  of  gold  withdrawn  out 
of  the  Treasury  within  the  last  two  months  has  been  something 
like  §70,000,000,  while  the  excess  of  expenditures  over  receipts  in 
the  same  time 'has  been  less  than  $20,000,000.  Will  the  gentleman 
explain  how  the  supplying  of  that  deficit  would  help  the  gold  re- 
serve, when  gold  is  being  drawn  out  so  much  more  rapidly  than 
the  greenbacks  are  being  reissued? 
•  1804 


8 

Mv.  BROSIUS.  :My  answer  to  that  is  that  my  friend  from  Ne- 
brtv^ka  is  laboring-  under  a  misapprelicnsion.  The  fact,  or  rather 
the  assumption,  npon  which  he  proceeds  is  not  warranted  in  fact. 
I  tliink  there  is  a  mistake  in  his  statement  abont  the  revenues. 

Mr.  BRYAN.  Does  the  gentleman  mean  to  say  that  the  excesa 
of  expenditures  over  receipts  has  been  more  than  twenty  millions 
in  two  months? 

Mr.  BROSIUS.  The  excess  of  expenditures  over  receipts  yes- 
terday was  $800,000.  The  day  before  yesterday  it  was  over  $700,000. 
During  the  last  year  it  has  been  .S: 55. 000. 000,  according  to  state- 
ments that  I  have  seen,  and  $100,000,000  already  appropriated  are 
awaiting  payment.  When  the  gentleman  puts  his  suggestion  in 
an  interrogative,  it  reminds  me  of  a  question  which  many  years 
ago  stirred  up  the  wise  men  of  England,  and  France  as  well.  The 
q^^estion  was.  "  Why  is  it  that  when  you  put  a  pound  fish  into  a 
bucket  full  of  water  the  water  does  not  run  over?  "  They  could 
not  answer  it:  but  a  Yankee  got  hold  of  it  and  put  the  fish  into 
the  bucket  full  of  water  and  found  that  the  water  did  run  over, 
and  that  was  the  answer  to  the  question. 

Mr.  BRYAN.  But  the  fact  is  that  the  deficit  has  not  exceeded 
twenty  millions  in  two  months,  while  the  gold  drawn  out  of  the 
Treasury  has  been  about  seventy  millions. 

;Mr.  BROSIUS.  I  trust  that  my  friend  will  allow  me  to  pro- 
ceed with  my  argument.  He  understands  how  difficult  it  is  for 
arithmeticians  to  agree  in  their  figures  in  regard  to  financial 
matters.  One  hundred  millions  of  gold  have  been  borrowed 
within  a  short  time,  and  that  must  be  reckoned  with  in  any  com- 
parison that  is  made  of  the  expenditures  with  the  revenues  of  the 
Grovernment. 

So  that,  Mr.  Chairman,  our  only  recourse  now  is  to  borrow 
money  to  maintain  the  gold  reserve  and  to  provide  for  the  run- 
ning expenses  of  the  Government  to  the  extent  to  which  our  re- 
ceipts are  lacking.  I  say  we  must  adopt  that  policy  or  we  must 
suffer  the  consequences  that  are  certain  to  ensue,  namely,  gold 
suspension,  with  all  that  that  implies. 

THE  BILL  PROPOSED. 

What  is  the  measure  proposed? 

It  authorizes  the  Secretary  to  borrow  money  to  meet  the  obli- 
gations of  the  Government  of  whatever  kind.  Nobody  doiibts 
that  he  ought  to  possess  that  authority,  excepting  the  few  who 
tarry  in  hope,  with  an  all  hail  of  welcome  on  their  lips  to  the 
expected  catastrophe  of  gold  suspension.  Some  say  he  already 
has  the  power  and  periodically  exercises  it.  That  is  true,  but 
there  is  a  cloud  upon  the  legitimacy  of  that  power  under  the  ex- 
isting law,  and  the  conditions  and  limitations  imposed  by  that 
law  are  not  suitable  to  the  circumstances  of  this  time,  and  it  is 
expedient  to  remove  the  doubt  and  give  the  people  the  benefit  of 
bonds  for  a  longer  time  and  at  a  lower  rate  of  interest,  and  which 
will  sell  at  par. 

COIN  OR  GOLD. 

The  main  proposition  being  conceded,  why  should  we  contend 
about  the  details?  Any  kind  of  a  bond  is  better  than  no  bond.  It 
matters  little  to  the  i)resent  or  future  generations  whether  it  is 
payable  in  coin  or  in  gold. 

Mr.  TAWNEY.    What  effect  would  it  have  upon  the  outstand- 

1804 


9 

ing  o  bligations  of  the  Government  to  now  use  the  word  ' '  gold  " 
instead  of  "coin "? 

Mr.  BROSI  US.  That  is  a  very  pertinent  inquiry  and  right  in  the 
line  of  my  thought.  I  was  about  to  say,  Mr.  Chairman,  that,  in- 
terpreted in  the  light  of  the  declared  purpose,  deliberate  pledge, 
and  distinct  policy  of  the  United  States,  the  terms  are  identical  in 
meaning.  Our  existing  bonds  are  payable  in  "  coin  "  in  the  letter, 
but  in  the  spirit  and  purpose  and  intent  of  the  United  States  they 
are  payable  in  the  best  money  that  is  in  vogue  at  the  time  they 
mature.  Woiild  it  do  any  serious  harm  to  express  in  words  our 
meaning,  purpose,  and  intent,  when  we  issues  bonds,  that  intent 
being  to  ijay  them  in  the  best  money  in  the  world?  My  friend 
from  Minnesota  asks  me  what  effect  such  a  declaration  would 
have  upon  the  existing  obligations  of  the  Government. 

I  will  direct  my  friend's  attention  to  the  resolution  adopted  by 
Congress  in  1869,  and  in  passing  I  may  say  that  I  listened  to  ob- 
servations upon  this  floor  not  later  than  yesterday  that  did  scant 
justice  to  the  policy  of  the  Government  and  the  meaning  of  that 
resolution  of  1869  to  strengthen  the  credit  of  the  United  States. 
Gentlemen  will  remember  that  at  the  time  of  the  i^assage  of  that 
resolution  some  of  the  obligations  of  the  Government  were  pay- 
able in  ' '  lawful  money  "  and  some  were  payable  in  "  coin;"  so  that 
the  contrasted  forms  of  money  in  contemplation  when  that  resolu- 
tion was  adopted  were  not  gold  and  silver,  but  coin  and  paper. 
That  resolution  declared  the  purpose  and  intent  of  the  United 
States  to  be  to  liquidate  all  those  obligations,  whether  payable  in 
terms  in  " lawful  money"  or  in  "coin,"  in  coin,  because  coin  was 
the  best  money  of  the  world  at  that  time,  and  the  word  had  no 
specific  reference  either  to  gold  or  silver,  because  silver  then  was 
better  than  gold  and  at  a  premium  in  the  market. 

Let  that  thought  find  a  place  in  your  minds,  that  when  that 
resolution  of  1869  was  adopted  the  contrasted  forms  of  money 
were  coin  and  paper,  while  here  the  contrasted  forms  of  money 
are  gold  and  silver,  and  not  coin  and  paper.  Now,  when  one  is 
better  than  the  other  it  is  right  to  presume,  and  I,  for  one,  never 
shall  presiime  anything  else  of  the  United  States,  than  that  it  in- 
tends to  pay  its  obligations  in  the  best  money  that  the  world 
knows. 

Mr.  McKEIGHAN.  Will  the  gentleman  permit  a  question  in 
the  line  of  his  remarks? 

Mr.  BROSIUS.     Certainly. 

Mr.  McKEIGHAN.  Is  it  not  a  fact  that  the  paper  obligations 
which  were  set  aside  by  the  act  of  1869  bore  a  greater  rate  of  in- 
terest because  they  were  payable  in  "lawful  money,"  and  that 
there  was  a  change  of  the  contract  in  favor  of  the  creditor  and 
against  the  masses  of  the  people?    I  would  like  an  answer. 

Mr.  BROSIUS.  I  will  answer  my  friend  with  great  pleasure, 
but  I  will  first  state  his  inquiry,  because  I  do  not  think  it  was 
heard  distinctly.  The  inqiiiry  of  my  friend  from  Nebraska  is 
this:  When  the  act  of  1869  was  passed  was  not  a  higher  rate  of 
interest  paid  on  the  obligations  that  were  payable  in  ' '  lawful 
money"  than  on  those  that  were  payable  in  "coin"?  I  answer 
affirmatively.  On  some  of  the  obligations  payable  in  ' '  lawful 
money"  7.3  per  cent  interest  was  paid  while  the  obligations  paya- 
ble in  "  coin"  bore  only  6  per  cent  interest. 

That  demonstrates  the  very  point  I  am  making.  "  I  thank 
1804 


10 

thee,  Roderick,  for  the  word."  I  was  trying  to  impress  iipon  the 
House  the  fact  that  at  that  time  the  contrasted  forms  of  money- 
were  i)aper  monej*  and  coin,  and  coin  was  lietter  money  than 
pajjcr,  and  therefore  the  liolders  of  paper  obligations  got  more  in- 
terest. To-day,  under  the  conditions  under  which  we  are  attempt- 
ing to  legislate,  the  contrasted  forms  of  money  referred  to  in  the 
bill  before  us  are  not  coin  and  paper,  but  gold  and  silver,  and  fol- 
lowing the  policy  of  the  United  States  to  pay  in  the  best,  if  we 
use  the  word  "gold"  we  are  only  expressing  the  intent  and  pur- 
pose of  the  Government  to  pay  its  obligations  in  the  Itest  money 
the  world  knows  at  the  time  of  the  maturity  of  the  obligation. 

It  may  be  suggested  in  support  of  the  contention  in  favor  of 
gold  payment  that  while  the  word  "coin"  has  always  been  used 
in  our  bonds  heretofore,  it  must  be  remembered  that  when  our 
bonded  war  debt  was  created  silver  was  at  a  premium  over  gold, 
and  when  the  existing  law  was  passed,  which  is  the  only  authority 
for  the  issue  of  bonds,  silver  was  not  in  circulation  to  any  extent, 
and  since  that  time  it  has  depreciated  to  50  cents  on  the  dollar. 
So  that  the  word  "coin  "  in  a  money  obligation  has  not  the  same 
ring  it  had  when  it  was  first  employed  in  our  bonds  to  express  the 
money  of  payment.  Changed  conditions  and  sentiments  at  home 
and  abroad  are  facts  with  which  many  wise  men  think  we  shoiild 
reckon  in  the  proposed  legislation,  lest  the  bonds  fail  to  find  a 
market  in  Eiirope  Avhere  it  is  hoped  and  expected  some  of  them 
will  go  to  arrest  the  exiwrt  of  gold. 

But  I  do  not  wish  it  to  be  implied  that  I  am.  strenuous  about 
using  the  word  ' '  gold  "  in  these  obligations.  I  am  perfectly  con- 
tent to  use  the  word  "coin."  1  am  not  discussing  the  question 
because  I  think  it  very  material.  I  am  rather  discussing  it  to  im- 
press the  fact  that  it  is  a  mere  subsidiary  matter  which  ought  not 
to  divide  the  House.  I  shall  vote  for  either  word,  if  we  can  pass 
a  bill.  I  was  going  to  say  there  might  be  an  objection  to  the  use 
of  the  word  "coin" — an  objection  I  heard  the  other  day — that  in 
\aew  of  the  rapid  increase  in  the  production  of  gold  it  might  be 
possible  that  before  these  obligations  mature  silver  may  be  the 
better  money;  and  if  the  obligation  is  a  gold  one  the  United  States 
might  yield  to  the  solicitation  of  opportunity  and  pay  in  the  infe- 
rior money — gold — and  thus  tarnish,  the  fair  fame  and  good  name 
of  the  United  States. 

Why,  sir,  Mr.  Rothschild,  the  great  banker  and  financier  of  Lon- 
don, paid  the  United  States  a  beautiful  compliment  the  other  day. 
When  he  was  asked  which  he  would  ijrefer,  American  obligations 
payable  in  coin  or  in  gold,  he  said,  ' '  I  would  rather  have  them  pay- 
able in  coin,  for  at  the  rate  that  gold  is  being  produced  now,  and 
in  anticipation  of  the  enlarged  production  in  the  near  future,  it 
is  not  impossible  that  silver  may  be  the  better  money  when  these 
bonds  mature.  And.  at  any  rate,  I  know  that  the  United  States, 
as  long  as  it  enjoys  the  option,  will  always  pay  its  obligations  in 
the  best  money  in  the  world."  I  believe  with  Mr.  Rothschild, 
and  therefore  I  think  it  not  a  matter  of  great  importance  whether 
you  put  the  word  "gold"  or  the  word  "coin"  in  our  obligations. 

CANCELLATION  OF  NOTKS. 

Whether  the  notes  that  are  redeemed  shall  be  canceled  or  re- 
tained in  the  Treasury  Avithout  being  reissued  except  in  exchange 
for  gold  I  do  not  think  is  a  matter  of  great  importance  as  long  as 
the>  are  disabled  for  active  duty.     Whether  they  are  tied  hand 


11 

and  foot  so  as  to  be  harmless  or  killed  outright,  it  comes  to  the 
same  thing  in  effect. 

To  go  on  borrowing  gold  to  meet  an  endless  drainage  would  be 
as  vain  a  task  as  that  of  the  daughters  of  Danaiis,  doomed  to 
draw  water  from  a  well  and  pour  it  eternally  into  a  perforated 
cask.  Such  a  process  of  redeeming  notes  that  are  never  redeemed 
is  not  consonant  with  reason,  and  sound  statesmanship  requires 
that  we  kill  with  the  utmost  dispatch  what  has  been  called  the 
auriferous  tapeworm  that  wriggles  back  and  forth  between  Wall 
street  and  the  Treasury. 

I  am  not  sure  that  in  view  of  all  the  aspects  of  the  situation  ex- 
isting and  in  anticipation  it  would  not  be  wise  to  cancel  the  notes 
as  they  are  redeemed.  There  are  at  least  two  considerations  in 
support  of  this  view.  First,  there  is  no  utility,  outside  of  mere 
sentiment,  in  retaining  the  notes  in  the  Treasury  to  be  exchanged 
for  gold.  That  would  make  them  gold  certificates  in  fact  though 
not  in  form,  and  it  would  be  better  on  grounds  of  general  reason- 
ing to  adhere  to  the  gold  certificates  already  authorized  than  add 
another  form  which  would  be  in  some  degree  unsuitable. 

The  other  thought  bearing  on  this  point  is  the  expectation,  aris- 
ing almost  to  a  belief,  that  the  entering  upon  the  policy  of  redeem- 
ing and  canceling  will  so  far  reassure  the  public  mind,  compose 
its  agitation,  allay  its  fears,  and  dispel  its  doubts  of  the  ability  and 
purpose  of  the  United  States  to  redeem  its  obligations  in  the  best 
money  and  keep  all  its  currency  equ.ally  good,  that  we  will  ex- 
perience a  progressively  diminishing  activity  in  the  redemption 
business,  and  in  a  short  time  the  presentation  of  notes  in  any  con- 
siderable amounts  for  redemption  will  cease  and  our  difficulties 
vanish.  If  that  expectation  should  be  realized  a  comparatively 
small  number  of  the  legal-tender  notes  would  be  canceled  and 
the  buying  of  gold  would  cease. 

EXCHANGE  OF  BONDS  TOR  NOTES  NOT  APPROVED. 

But  these  suggestions  are  not  intended  to  go  to  the  length  of 
supporting  that  portion  of  the  bill  which  provides  for  the  exchange 
of  the  bonds  for  the  legal-tender  notes.  This  has  in  contemplation 
the  conversion  of  all  the  legal  tenders  into  interest-bearing  indebt- 
edness without  regard  to  the  necessity  for  so  doing,  it  being  a  dis- 
tinct end  to  get  rid  of  that  class  of  currencj^  entirely.  I  totally 
disavow  any  acquiescence  in  such  a  purpose. 

The  people  of  the  United  States  do  not  desire  to  be  rid  of  the 
limited  number  of  greenbacks  now  in  our  currency  excepting  so 
far  as  it  is  necessary  to  afford  present  relief,  and  I  believe  the  process 
of  cancellation  should  be  limited  to  the  notes  presented  for  redemp- 
tion and  should  cease  as  soon  as  sufficient  relief  is  afforded,  so 
that  the  destruction  of  our  greenback  currency  shall  not  exceed 
the  actual  necessities  of  the  situation,  nor  our  people  be  unneces- 
sarily biirdened  with  interest  by  the  needless  conversion  of  non- 
interest-bearing  into  interest-bearing  indebtedness. 

Of  course,  if  the  expectations  I  have  indicated  are  disappointed, 
and  it  is  established  by  actual  experience  that  we  can  not  main- 
tain our  gold  reserve  with  our  greenbacks  in  circulation,  then 
they  must  go,  but  that  assumption  I  will  not  admit  except  on  the 
compulsion  of  absolute  demonstration. 

VARIETY  IN  THE  ISSUE  OF  BONDS. 

Nor  does  there  seem  to  be  much  substance  in  the  inquiries 
whether  there  shall  be  one  or  many  lands  of  bonds  authorized. 

1804 


12 

In  my  .iudKment  the  only  bond  that  should  be  issued  is  the  best 
bonil  for  the  iiurpose  intended.  After  that  I  do  not  see  it  very 
iuiporrant  to  trouble  the  market  with  an  inferior  bond. 

The  most  marketable  bond  is  a  long-time  bond,  bnt  I  have  no 
doubt  of  the  ability  of  the  United  States  to  float  a  3  per  eentbond 
jtayable  in  coin  orin  gold  for  a  short  or  a  long  term.  I  would 
tlierefore  make  the  bond  suit  the  convenience  of  the  United  States 
in  respect  to  time.  It  is  not  likely  that  we  will  be  ready  to  pay 
anv  of  these  bonds  within  five  years,  and  if  we  make  them  paya- 
ble at  the  pleasure  of  the  United  States  after  five  years  we  woxild 
enjov  the  privilege  of  i)ayment  whenever  we  were  ready  and 
not  until  then.  To  name  a  time  of  maturity  when  they  must  be 
jiaid  it  seems  to  me  unnecessary,  though  it  can  do  no  harm  and  I 
do  not  object  to  it. 

6HOCLD  BE  KEPT  AT  HOME. 

Then  I  would  provide  that  such  amounts  of  the  bonds  of  the 
denominations  of  $20,  $50,  and  $100  as  could  be  disposed  of  in  that 
manner  slioiild  be  placed  for  sale  at  such  national  banks  and  post- 
(_)ffic-es  in  the  United  States  as  shall  be  selected  by  the  Secretary 
of  the  Treasury,  so  as  to  give  our  own  people  the  first  opportunity 
to  take  the  bonds,  until  the  home  demand  is  supplied.  This  would 
popularize  the  loan  and  inure  greatly  to  the  advantage  of  the 
Government.  If  all  our  existing  bonds  were  held  at  home  it 
would  afford  a  large  element  of  relief  in  our  present  situation,  if 
it  would  not  have  prevented  it  altogether.  Our  gold  indebted- 
ness abroad  imposes  an  enormous  burden  upon  us  which  we  must 
meet  and  must  continue  to  meet  until  it  is  paid  or  is  transferred 
to  our  own  people. 

France,  \Anth  the  fabulous  debt  of  $4,000,000,000,  suffers  little 
inconvenience  because  it  is  owing  to  her  own  people.  The  only 
remedy  conceivable  for  this  state  of  things  is  to  restore  confidence 
at  home  and  abroad  in  oiir  integi*ity  and  our  solvency,  so  that  not 
only  our  securities  will  remain  al)road  but  our  interest  be  rein- 
vested at  home,  otherwise  the  foreign  drain  will  continue,  for  no 
financial  legerdemain  has  ever  been  discovered  to  escape  paying 
our  foreign  balances  in  gold  when  the  rate  of  exchange  is  at  or 
above  the  gold  shipping  point. 

This,  Mr.  Chairman,  being  the  situation,  and  in  view  of  the  ex- 
treme urgency  with  which  the  matter  presses  upon  our  considera- 
tion, can  it  be  possible  that  we  can  not  secure  sufficient  unity  of 
view  and  action  to  do  the  one  thing  and  the  only  tiling  left  for  us 
to  do — t;o  authorize  the  Secretary  of  the  Treasury  to  borrow  the 
means  of  carrying  on  the  Government  and  rescuing  the  United 
States  from  impending  disaster  and  dishonor? 

PROMPT  ACTION  DESIRED. 

3Ir.  Chairman,  the  mischief  works  while  we  wait;  the  difficulties 
deepen  while  we  dally  with  our  duty,  promptitude  is  of  the  es- 
sence of  our  obligation  to  act,  and  therefore  I  believe  that  any 
union  of  minds  and  voices  in  this  Chamber  that  will  bring  succor 
to  the  country  and  spare  us  national  disgrace  will  be  an  honorable 
and  patriotic  alliance. 

AVOID  POINTS  OF  CONTROVERSY. 

That  action  might  be  unimpeded  by  the  delays  of  controversy 
and  the  peril  of  final  disagreement,  I  have  sought  in  my  humble 
way  to  have  the  bill  as  free  as  possible  from  causes  of  division 


13 

among  us,  for  I  have  believed  it  would  promote  the  passage  of  a 
measure  to  limit  its  scope  to  the  very  mischief  to  be  remedied. 
A  bill,  short,  sharp,  and  decisive,  that  goes  directly  to  the  pur- 
pose in  view,  without  circumlocution,  without  the  baggage  of  in- 
cidental and  unnecessary  meddling  with  other  and  different  mat- 
ters of  legislation,  will  be  much  more  likely  to  pass  this  House 
than  one  containing  a  variety  of  unrelated  provisions  which  mul- 
tiply the  points  of  controversy  and  invite  contention  and  disagree- 
ment over  matters  in  which  one  and  another  sees  a  service  to 
some  siDCcial  interest. 

There  is  hope  of  agreement  only  in  minimizing  the  grounds  of 
controversy,  and  hence  I  have  tried  to  keep  out  of  the  bill  provi- 
sions looking  to  the  reorganization  of  our  financial  system,  which 
undertaking  is  not,  in  my  judgment,  suitable  to  the  circumstances 
of  our  situation,  and  can  be  wisely  deferred  to  a  more  appropriate 
season  instead  of  engaging  our  minds  when  they  are  already  taxed 
to  the  limit  of  their  capacity  in  finding  a  way  to  strengthen  the 
Treasury  and  insure  the  solvency  of  the  Government. 

What  then,  Mr.'  Chairman,  stands  in  the  way?  Are  we  kept 
from  agTeement  by  an  unworthj^  pride  that  is  ashamed  to  yield 
or  an  equally  censurable  obstinancy  that  delights  to  contend? 

It  is  not  patriotic  nor  wise  to  waste  time  and  further  embarrass 
the  situation  by  hypercriticism  and  cai)tious  and  carping  com- 
plaints of  the  details  of  the  proposed  measure  as  long  as  it  is  in 
substance  calciilated  to  answer  the  end  proposed.  If  it  bridges 
the  chasm  it  ought  to  pass  in  one  form  or  another. 

In  one  of  the  trying  hours  of  Mr.  Lincoln's  experience  during 
the  war,  when  he  keenly  felt  the  unkindness  of  those  who  carped 
and  caviled  at  his  conduct,  when  he  bent  and  swayed  under  the 
mighty  responsibilities  of  the  war,  he  illustrated  the  situation  in 
this  striking  manner.  He  said,  "If  all  your  property  was  in  gold, 
and  you  had  put  it  in  the  hands  of  Blondin  to  carry  across  Niagara 
on  a  rope,  would  you  shake  the  cable  or  keep  shouting  at  him, 
'  Stand  straighter;  walk  faster;  walk  slower;  lean  north  or  south '? 
No;  you  would  hold  your  breath  and  your  tongue  as  well. " 

The  Administration  is  trying  to  keep  the  gold  in  the  Treasury 
to  save  the  honor  of  the  United  States,  and  it  is  uhijatriotic  to 
catch  at  iinconsidered  trifles  to  impede  the  consummation  of  the 
undertaking.  Or  is  it  mere  partisan  politics  that  hinders  us?  Per- 
ish the  thought!  The  representatives  of  the  people  must  be  pa- 
triots before  they  are  partisans.  Will  any  member  dispute  the 
proposition  that  in  the  situation  which  invites  our  consideration, 
with  a  crisis  looming,  huge  and  hideous,  in  the  twilight  future, 
we  ought  to  see  nothing  but  the  best  interests  of  the  country? 

The  member  of  this  House  who  in  this  supreme  exigency  suf- 
fers his  vision  to  be  obscured,  his  judgment  to  be  warped,  and  his 
conclusions  to  be  vitiated  by  prejudice,  passion,  or  partisanship 
discredits  himself  in  the  eyes  of  his  country  and  will  be  held  to 
strict  accountability  by  his  constituents.  There  is  but  one  word 
that  can  express  the  inspiring  and  controlling  influence  of  this 
hour, and  that  word  is  "patriotism."  [Applause.]  There  is  but 
one  word  that  can  denote  the  action  which  that  overruling  in- 
spiration commands,  and  that  word  is  "duty."  He  who  is  insen- 
sible to  the  one  or  disobedient  to  the  other  is  not  a  safe  custodian 
of  his  country's  interests  and  was  misdirected  when  he  was  sent 
to  this  body. 

1804 


14 

I  inthilge  the  liope  that  no  member  of  this  House  entertains 
views  of  public  duty  which  constrain  him  in  determining  his  ac- 
tion upon  this  measure  to  ask  who  initiated  it,  but  only  is  it  wise 
legislation;  not  which  side  of  this  Chamber  is  advocating  or  op- 
posing it,  but  only  is  it  calculated  to  meet  the  need  of  the  hour 
and  mitigate  the  afflictions  we  are  suffering  by  restoring  the  con- 
fidence of  our  people  in  the  money  of  the  country. 

I  am  profoimdly  moved  by  the  conviction  that  this  is  the  time 
and  this  the  occasion  (if  I  may  be  pardoned  for  using  an  ilhistra- 
tion  a  second  time  in  this  presence)  for  us  to  emulate  the  gener- 
ous sentiment  expressed  by  Philip  of  France  in  the  Crusades, 
when  he  said  to  Richard  of  England:  ''  Let  the  only  strife  between 
the  lions  of  England  and  the  lilies  of  France  be  which  shall  carry 
tliem  farthest  into  the  ranks  of  the  infidels."  So  I  pray  you,  let 
the  only  strife  between  the  parties  represented  in  this  Chamber 
to-day.  in  the  presence  of  this  impending  crisis,  be  which  shall 
carry  the  banner  of  honorable,  patriotic,  and  effective  relief  far- 
thest into  the  ranks  of  the  opposition.     [Applause.] 

1S04 


CURRENCY  REFORI 


I  have  ever  been  tlie  enemy  of  banks ;  not  of  those  discc  )at  of 

those  foisting  tlieir  own  iiaiier  into  circulation  and  thus  b.'i  My 

?eal  against  those  institutions  was  so  warui  and  open  at  tl  wf  the 

Bank  of  the  UMited  States  that  I  was  derided  as  a  maniac  oy  tue  tribe  of  bank 
mongers  who  were  seeking  to  filch  from  the  public  their  swindling  and  barren 
gaius. ^Thoinafi  Jefferson. 

So  persecuted  they  the  prophets  which  were  before  you. — Matthetv,  v,  12. 


SPEECH 


HON.  WILLIAM  J.  BRYAN, 


OF  NEBRASKA, 


HOUSE  OF  REPRESENTATIVES, 


Saturday,  December  22,  1894. 


WASHINGTON. 
1895. 


SPEECH 

OF 

HON.   WILLIAM   J.   BEYAN. 


The  House  being  in  Committee  of  the  Whole  on  tlie  state  of  the  Union,  and 
having  under  consideration  tlie  bill  (H.R.8149)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes — 

Mr.  BRYAN  said: 

Mr.  Chairman:  I  desire,  in  the  first  place,  to  call  attention  to 
the  extraordinary  circumstances  which  surround  the  presentation 
of  this  measure.  This  is  the  closing  session  of  the  Fifty-third  Con- 
gress, and  nearly  half  of  the  members  of  the  House  will  retire  in 
about  two  months.  Yet  the  President  of  the  United  States  has 
asked  this  Congresg  to  pass  a  bill  which  changes  the  entire  char- 
acter of  our  paper  money.  If  this  proposition  were  to  take  off  the 
1  per  cent  tax  from  national-bank  circulation,  or  if  it  were  to  al- 
low them  to  increase  their  circulation  to  100  per  cent  on  the  bonds, 
it  would  not,  although  objectionable,  involve  any  new  principle; 
but  the  plan  proposed  involves  an  entirely  new  principle.  It  revo- 
lutionizes our  currency  system,  and  this  change,  which  affects 
every  man,  woman,  and  child  in  the  nation,  which  concerns  every 
inhabitant,  is  asked  of  this  Congress  without  the  subject  ever  hav- 
ing been  discussed  by  the  American  people. 

I  doubt  if  you  will  find  a  ijarallel  in  the  last  twenty-five  years. 
I  doubt  if  you  will  find  such  a  repudiation  of  the  theory  of  demo- 
cratic government.  Why  do  we  have  platforms?  It  is  in  order 
that  the  people  who  vote,  kno^\ang  the  policies  to  be  pursued,  may 
express  themselves  on  those  policies,  and  select  such  agents  as 
will  carry  out  their  ijurposes.  If  that  is  the  purpose  of  platforms, 
if  we  believe  that  what  power  we  have  really  comes  from  the 
people,  and  if  we  believe  that  they  are  competent  to  govern  them- 
selves, what  excuse  can  be  given  for  proposing  so  important  a 
change  in  the  monetary  policy  of  the  country,  without  ever  hav- 
ing submitted  the  question  for  public  consideration? 

Has  any  President  ever  proposed  before  to  annihilate  the  green- 
backs? Has  any  party  ever  declared  for  it?  Have  any  campaign 
speakers  ever  presented  that  isstie  to  the  American  people?  And 
yet  after  an  election,  one  of  the  most  extraordinary  elections  ever 
held  in  the  United  States,  after  a  political  defeat  withoiit  prece- 
dent, the  defeated  party  in  control  of  Congress  is  asked,  before  it 
retires,  to  please  turn  over  the  issue  of  all  paper  currency  to  the 
banks.  More  than  that,  the  Banking  and  Currency  Committee  at 
once  takes  up  the  question  and  certain  people  are  invited  to  come 
and  be  heard.  And  who  are  invited?  The  bankers  are  invited  to 
come  and  give  their  opinions  as  to  the  proposed  plan.  Has  any 
1779  8 


one  else  been  heard?  Is  the  banker  the  only  man  interested  in 
this  question?  And  yet,  after  hearing  for  a  week  from  the  bank- 
ers, a  report  is  made — one  of  the  most  extraordinary  reports  ever 
made  to  Congress.  By  a  bare  majority  the  committee  decide 
to  throw  the  bill  into  the  House,  and  they  say  that  owing  to  the 
exigencies  of  the  Treasury  they  agree  to  the  report,  each  one  re- 
serving the  right  to  propose  amendments  and  to  vote  against  the 
bill  I     [Laughter.] 

Mr.  PENCE.    They  begin  to  see  that  they  are  going  to  do  it. 

Mr.  BRYAN.  Another  extraordinary  feature  in  connection 
with  this  bill.  Before  this  Congress  has  been  in  session  a  month 
we  are  brought  face  to  face  with  this  proposed  change  in  our  cur- 
rency, and,  withoiTt  having  time  to  read  the  testimony  of  the  bank- 
ers even,  the  matter  is  brought  up  in  this  House  for  discussion. 
It  was  at  first  proposed  to  have  two  days  of  general  debate.  That 
was  the  first  proposition;  and  then  unanimous  consent  was  asked 
to  close  debate  under  the  general  rule  this  week,  when  it  took 
three  days  for  the  members  of  the  committee  to  get  through,  not 
to  speak  of  the  few  other  members  of  Congress  who  may  feel  that 
their  constituencies  are  interested. 

I  say,  Mr.  Chairman,  that  when  you  consider  the  circumstances 
surrounding  this  question  I  doubt  whether  you  will  find  a  parallel 
even  in  the  history  of  the  United  States.  What  does  it  mean? 
The  President  has  launched  upon  the  country  an  issue,  an  issue 
which  must  be  dominant  until  either  all  Grovernment  paper  is  an- 
nihilated or  until  all  bank  paper  is  annihilated.  That  is  the  issue. 
And  instead  of  submitting  it  to  the  country  for  calm  discussion 
we  are  asked  now  to  take  snap  judgment  upon  the  people  and 
decide  the  question  finally,  so  that  if  the  people  want  to  change  it 
hereafter  they  must  get  a  House,  Senate,  and  President  to  agree 
to  the  change. 

Mr.  Chairman,  what  excuse  has  been  given  for  presenting  this 
bill  at  this  time?  Well,  there  was  a  lame  excuse  in  the  beginning. 
But  while  there  might  have  been  some  possible  excuse  for  the 
original  bill,  the  committee  recommends  a  substitute  which  takes 
away  the  only  shadow  of  an  excuse  that  the  committee  ever  had. 
What  was  the  excuse  given  for  the  bill?  Why,  it  was  said  that 
the  exigencies  of  the  Treasury  required  immediate  action.  And 
what  were  those  exigencies?  They  said,  "They  are  presenting 
greenbacks  and  Treasury  notes  and  drawing  out  tiie  gold  and  will 
compel  another  issue  of  bonds!"  And  this  plan  as  first  proposed 
was  commended  to  Congress  on  the  ground  that  it  woiild  absorb 
about  half  of  the  Treasury  notes  and  greenbacks,  and  thereby 
protect  the  gold  reserve. 

It  is  useless  to  reply  that  it  will  not  take  up  all  these  paper  obliga- 
tions, and  that  so  long  as  any  are  outstanding  they  can  still  be 
used  just  the  same  as  if  they  are  all  outstanding.  That  is  a  com- 
plete answer  to  the  excuse.  But  men  who  desire  a  thing,  and  give 
a  pretended  excuse  for  wanting  it,  will  not  be  deterred  when  you 
take  away  theii*  excuse.  The  influence  back  of  this  bill  is  the  same 
influence  that  was  back  of  the  repeal  of  the  Sherman  law  a  j'ear 
ago;  and  when  we  fully  met  and  answered  the  excuse  they  gave 
for  that  bill  it  did  not  lessen  the  power  behind  the  bill.  Did  they 
not  tell  us  then  that  the  reason  why  the  Shei'man  law  must  be  re- 
pealed was  that  they  were  drawing  out  gold  on  the  Treasury  notes? 
Do  you  remember  that?  iVnd  I,  among  others,  tried  to  call  the 
1779 


attention  of  the  House  to  the  fact  that  as  long  as  we  had  $346,000,- 
000  of  greenbacks  which  could  be  used  for  the  same  purpose  it  was 
foolish  to  complain  that  the  gold  was  being  drawn  out  on  the  Sher- 
man notes. 

I  suggested  that  it  was  like  finding  fault  because  the  gate  was 
open  when  the  whole  fence  was  down,  and  that  the  gold  drain 
would  go  on  just  the  same,  until  the  Secretary  exercised  the  option 
to  redeem  in  silver,  as  he  should  do.  But  we  labored  in  vain. 
The  reason  given  was  not  the  real  reason,  and  therefore  to  answer 
it  gained  no  advantage,  and  it  will  not  have  any  effect  on  those 
who  are  urging  the  passage  of  this  measure  noAV  to  show  them 
that  the  bill  will  not  bring  a  particle  of  relief  to  the  Treasury.  I 
will  call  your  attention  to  the  testimony  of  Mr.  Butler,  of  New 
Haven,  one  of  the  bankers,  whose  testimony  is  conclusive  on  this 
point. 

Mr.  BLACK  of  Georgia.  Does  the  gentleman  mean  to  say  that 
the  committee  invited  bankers  only  to  appear  before  the  commit- 
tee? 

Mr.  BRYAN.  Perhaps  I  should  not  make  it  so  broad  as  that; 
but  they  were  nearly  all  bankers. 

Mr.  WARNER.     Oh,  no;  the  gentleman  is  mistaken  in  that. 

Mr.  PENCE.     All  but  Mr.  Carlisle  and  Mr.  Warner. 

Mr.  BRYAN.  I  think  if  the  members  will  take  the  testimony 
they  will  find  that  the  great  bulk  of  this  testimony  was  given  by 
bankers. 

Mr.  WARNER.  Horace  White  is  not  a  banker;  Mr.  Dods- 
worth  is  not  a  banker;  A.  J.  Warner  is  not  a  banker. 

Mr.  BRYAN.     You  have  named  three. 

Mr.  WARNER.     C.  C.  Jackson  is  not  a  banker. 

Mr.  BRYAN.     Well,  that  is  fdiir;  but  Mr.  Jackson  is  a  broker, 

Mr.  WARNER.  If  you  will  give  me  the  list  I  will  show  you  a 
number  who  are  not  bankers. 

Mr.  BRYAN.  Take  another  list,  please,  and  I  will  proceed 
while  you  count  them. 

Mr.  WARNER.  I  know  the  gentleman  wants  his  statement  to 
be  correct.  Mr.  Carlisle  and  Mr.  Eckels  took  up  a  large  part  of 
the  time  of  the  committee.  On  going  over  the  record  I  find  that 
those  who  are  not  bankers  whose  hearings  were  extended  were 
Mr.  White,  Mr.  Dodsworth,  Mr.  Gunton,  Mr.  Rothwell.Mr.  A.J, 
Warner;  that  those  who  are  either  bankers,  brokers,  or  financiers, 
were  Mr.  Butler,  Mr.  Corn  well,  Mr.  Jackson,  Mr.  Homer,  Mr. 
Pratt,  Mr.  Ripley.  Mr.  Williams,  and  one  other  gentleman,  Mr. 
St.  John,  of  New  York,  who  came  here  repudiating  the  idea  that 
he  represented  the  bankers  and  declared  himself  in  favor  of  free 
silver.  If  Mr.  St.  John  be  added  to  those  who  are  not  bankers  or 
brokers  or  in  any  way  allied  with  them,  the  time  and  the  space 
given  them  is  greater  than  tliat  given  to  all  those  who  are  classed 
as  bankers  and  brokers — this  even  though  the  time  and  space  given 
to  Mr.  Carlisle  and  Mr.  Eckels  be  left  entirely  out  of  considera- 
tion. 

Mr.  BRYAN.    In  numbers,  how  do  they  compare? 

Mr.  WARNER.  In  numbers,  there  is  one  more  of  those  whom 
the  gentleman  considers  as  bankers  than  of  the  others,  if  we  omit 
Mr.  Carlisle  and  Mr.  Eckels,  upon  whom  so  much  time  was  spent. 

Mr.  BRYAN.     Now,  Mr.  Butler  says: 

It  seems  vei'y  much  like  pouring  water  into  a  sieve  and  catching  it  in 
1779 


6 

another  sieve.  One  million  of  legal-tender  notes  deliberately  worked  coiild 
take  one  hundred  millions  of  koIu  out  of  the  Treasury  of  the  United  States  in 
any  one  year.  Ten  millions  or  legal-tendei'  notes,  worked  to  the  full  capacity 
that  they  mi^rht  be  worked,  could  withdraw  a  thousand  millions  of  yola  from 
the  Treasury. 

This  is  Mr.  Butler's  statement  and  it  is  common  sense.  Leave 
cen  millions  of  these  notes  ontstantling  and  they  can  draw  ont  a,old 
from  the  Treasury  as  effectttally  as  if  you  leave  every  one  of  them 
outstanding.  And  yet.  Mr.  Chairman,  even  in  the  begiuTiing  this 
bill  did  not  remedy  this  ditHculty,  and  the  amendment  proposed, 
which  allows  the  national  lumks  to  go  on  under  their  present  char- 
ters so  that  they  need  not  reorganize  and  deposit  this  money,  takes 
away  the  excuse  uixm  which  the  bill  was  first  brought  in.  At  this 
time  there  is  m  >  excuse  for  it.  There  is  no  excuse  for  this  bill  unless 
it  can  remedy  the  Treasury  difticitlty  complained  of.  But  if  the 
real  difficulty  was  what  some  gentlemen  say  it  is.  there  has  been  a 
remedy  proposed  in  keeping  with  the  gold-standard  idea.  There 
is  one  thing  about  this  debate  which  has  gratified  me,  that  is,  that 
some  of  the  advocates  of  tliis  plan — perhaps  not  in  detail,  but 
generally — have  been  frank  enough  to  meet  the  issue  squarely  and 
tell  us  just  what  they  want. 

The  great  difficulty  which  we  have  had  to  contend  with  in  dis- 
cussing this  money  question  heretofore  is  that  we  have  been  de- 
bating with  men  who  were  behind  masks,  and  who  were  pretend- 
ing friendship  to  silver,  Avhen  they  could  not  be  relied  upon  to 
vote  for  silver  in  any  i\  >rm  or  at  any  time.  But  in  this  discussion 
some  gentlemen  have  been  frank  enough,  I  say,  to  tell  us  what 
they  really  think,  and  they  have  pointed  out  what  they  regard  as 
the  only  measure  of  relief,  and  I  want  the  members  of  this  House 
to  realize  just  what  the  gold  standard  means.  The  gentleman 
from  Connecticut  []Mr.  Sperky}  who.  from  his  standpoint,  dis- 
cussed this  subject  with  great  intelligence,  says  that  you  must 
fund  the  greenbacks. 

Mr.  Chairman,  that  is  all  you  can  do.  If  you  want  the  green- 
backs taken  up.  so  that  there  will  be  no  more  of  them  and  no  more 
Treasury  notes  with  which  to  draw  gold  out  of  the  Treasury, 
there  is  only  one  thing  that  you  can  do,  and  that  is  to  fund  them 
in  bonds,  and  you  may  as  well  accept  that  conclusion.  But  I 
asked  two  or  three  gentlemen  this  question:  ' '  Suppose  you  do  that, 
what  are  you  going  to  do  then?  Does  that  protect  the  Treasury? " 
And  they  answered,  "No;  we  have  $.500,000,000  of  silver  and 
silver  certificates  outstanding,  and  when  the  greenbacks  and  the 
Treasury  notes  are  out  of  the  way,  we  must  then  redeem  silver  in 
gold,  or  the  same  difficulty  will  confront  us  that  confronts  us 
now.'"  This  question  was  asked  of  Mr.  Jackson,  of  Boston,  who 
testified  before  the  committee.     This  is  his  testimony: 

Mr.  JoHxsox  of  Ohio.  You  want  to  retire  the  greenbacks  so  that  there  will 
be  no  call  loans  for  gold? 

Mr.  Jacksox.  Exactly. 

Mr.  JoHNsox  of  Ohio.  And  then  you  want  to  propose  a  step  further — that 
is,  to  make  every  silver  dollar  or  silver  certificate  redeemable  by  the  Govern- 
ment in  gold. 

Mr.  Ja<  Ksox.  Every  one  of  them. 

Mr.  JOHXSON  of  Ohio.  So  you  would  still  have  to  carry  gold. 

Mr.  Jackson.  Yes,  sir. 

»♦*♦♦•* 

Mr.  JoHXSON  of  Ohio.  After  destroying  the  belief  of  the  people  in  further 
silver,  as  you  think  ouLrht  to  be  done,  you  think  the  next  stij)  would  be  to  re- 
tire greenbai-ks  and  finally  to  retire  all  the  silver  in  circulation? 

Mr.  Jackson.  Tliat  is  it. 


Mr.  Johnson  of  Ohio.  And  that  is  the  feeling  among  the  people  of  New 
York  City? 
Mr.  Jackson.  I  live  in  Boston,  but  I  should  say  it  is,  decidedly. 

The  gentleman  from  Connecticut  [Mr.  Sperry]  told  us,  toward 
the  conclusion  of  his  very  able  speech  yesterday  or  the  day  before, 
that  in  his  judgment  it  was  not  sufficient  to  fund  the  greenbacks 
and  Treasury  notes  in  bonds,  but  that  we  must  fund  also  a  part 
of  our  silver  in  gold  bonds. 

Now,  Mr.  Chairman,  the  members  of  this  Congress  might  just 
as  well  meet  this  question.  Even  if  the  proposed  plan  would  ab- 
sorb every  greenback  and  Treasury  note  oiitstanding,  still  it  would 
bring  no  relief.  It  would  require  more  than  a  billion  and  a  half 
of  new  bank  notes  to  do  that,  but  if  it  could  be  done  still  we  would 
not  be  any  nearer  the  end.     What  is  the  difficulty?    The  law  says: 

Upon  demand  of  the  holder  of  any  of  the  Treasury  notes  herein  provided 
for  the  Secretary  of  the  Treasury  shall,  under  such  regtilations  as  he  may  pre- 
scribe, redeem  such  notes  in  gold  and  silver  coin,  at  his  discretion. 

But  there  is  a  clause  reading  as  follows: 

It  being  the  established  policy  of  the  United  States  to  maintain  the  two 
metals  on  a  parity  with  each  other  upon  the  present  legal  ratio,  or  such  ratio 
as  may  be  provided  by  law. 

Now,  the  present  Secretary,  and  the  one  preceding  him,  have 
constriied  that  to  mean  that  the  option  really  belongs  to  the  note 
holder,  and  the  same  principle  has  been  applied  to  the  greenbacks. 
Mr.  Chairman,!  find  the  English  language  hardly  adequate  to 
express  my  feelings  on  that  subject.  What  does  that  construction 
mean?  Why,  there  is  not  a  lawyer  who  would  apply  such  a  con- 
struction in  anything  except  finance.  You  construe  laws  so  that 
they  will  stand,  not  so  that  they  will  fall;  and  yet  that  construc- 
tion means  this:  "The  option  is  with  the  Secretary,  but  it  is 
the  policy  of  the  Government  not  to  allow  him  to  use  it!"  If  you 
construe  the  last  clause  so  as  to  take  away  the  option  from  the 
Secretary,  from  the  Government,  then  you  construe  a  part  of  the 
law  so  as  to  contradict  the  other  part;  and  no  law  ought  to  be 
construed  in  that  way  if  there  is  any  other  reasonable  construc- 
tion. Now,  that  construction  is  the  authority  of  the  Treasury 
Department  for  paying  in  gold  when  it  is  demanded,  and  the 
Government  pays  in  gold  simply  because  the  note  holder  demands 
it,  and  the  Govei'nnient  is  afraid  that  if  it  refuses  gold  will  go  to 
a  premium. 

But  when  you  have  taken  the  greenbacks  and  Treasury  notes 
out  of  the  way,  and  men  come  and  present  silver,  does  not  that 
same  clause,  "  it  being  the  established  policy  of  the  United  States 
to  maintain  the  two  metals  on  a  parity  with  each  other  upon  the 
present  legal  ratio,  or  such  ratio  as  may  be  provided  by  law,"  ap- 
ply with  as  much  force?  And  will  they  not  say  that  the  moment 
the  Government  refuses  to  redeem  a  silver  certificate  in  gold,  gold 
will  go  to  a  premium,  and  that  we  will  be  on  a  silver  basis?  I  call 
attention  to  this  in  order  that  members  of  the  House  may  xxnder- 
stand  that  there  is  no  relief  for  the  Treasury  provided  in  this  bill, 
and  would  not  be  if  the  bill  allowed  twice  as  many  bank  notes  to 
be  issued  as  it  does  permit.  Now.  what  will  bring  relief?  There 
is  only  one  remedy  for  this  difficiilty,  and  we  must  make  up  our 
minds  either  to  accept  that  remedy  or  follow  the  gold  standard  to 
its  legitimate  conclusion  and  issue  bonds. 

Either  the  Government  has  the  option,  and  can  exercise  it,  to 
pay  in  silver  when  it  wants  to,  or  we  must  make  all  paper  redeem- 
1779 


8 

able  in  gold  only  and  abandon  tbe  bimetallic  standard.  I  am  in 
favor  of  the  former.  I  believe  in  bimetallism.  We  find  that  along 
in  1878  or  1879, 1  think  it  was,  a  gentleman,  afterwards  on  the  Su- 
preme Bench,  Mr.  INIatthews,  of  Ohio,  introduced  a  resolution  de- 
claring it  the  sense  of  Congress  that  the  Government  had  the 
right  to  redeem  its  coin  obligations  in  either  gold  or  silver.  The 
resolution  passed,  and  he  was  not  called  a  lunatic  either.  That 
was  the  public  opinion  at  that  time.  Mr.  Sherman  admitted  in 
an  interWew  before  one  of  our  committees  about  that  time  that 
the  fact  that  the  Government  had  this  option  and  could  exercise 
it  helped  him  in  the  resmnption  of  specie  payments.  If  we  had 
the  right  then,  we  have  it  now;  and  if  we  have  it  now,  why  not 
exercise  it,  Mr.  Chairman,  and  not  turn  over  our  finances  to  the 
contfol  of  those  who  conspii-e  to  defeat  the  purposes  of  the  Gov- 
ernment? 

The  word  "conspire"  is  perhaps  strong,  but  I  want  to  call  at- 
tention to  what  is,  to  my  mind,  conclusive  evidence  of  conspiracy 
in  the  sense  of  collusion.  The  members  of  the  House  will  re- 
member that  when  we  were  here  discussing,  a  little  more  than  a 
year  ago,  the  proposed  repeal  of  the  SheiTnan  law,  we  were  told 
that  they  were  presenting  Treasury  notes  and  drawing  out  gold. 
I  have  the  report  of  the  Treasurer  of  the  United  States  on  that 
subject.  You  remember  that  we  assembled  in  August,  and  that 
the  bill  repealing  the  purchasing  clause  of  the  Sherman  law  be- 
came a  law  about  the  1st  of  November. 

I  find  that  during  the  three  months,  August,  September,  and 
October,  there  was  presented  in  greenbacks  $1,595,861  for  redemp- 
tion, and  ia  Treasury  notes  $1,788,480.  Now,  we  have  outstand- 
ing, speaking  approximately,  about  twice  as  many  greenbacks  as 
we  have  Treasury  notes,  and  if  they  had  been  used  promiscuously 
at  that  time  we  would  have  been  called  upon  to  redeem  about  two 
dollars  in  greenbacks  for  every  dollar  in  Treasury  notes.  But  that 
was  a  time  when  they  were  trying  to  show  that  the  Treasury  notes 
were  dangerous;  and  for  those  months  the  Government  was  re- 
quired to  redeem  more  Treasury  notes  than  greenbacks.  Now, 
there  were  two  months  when  the  discus^n  was  going  on  in  the 
Senate — September  and  October — and  for  those  two  months  the 
Treasury  notes  presented  amounted  to  $630,115,  while  the  green- 
backs amounted  to  only  $436,104,  abotltone  dollar  and  fifty  cents 
in  Treasury  notes  to  every  dollar  in  greenbacks,  when  the  ratio 
would  naturally  have  been  two  of  greenbacks  to  one  of  Treasury 
notes. 

Why  was  that?  I  believe  it  was  because  the  people  who  wanted 
that  law  repealed  were  bringing  those  notes  for  redemption  in  or- 
der to  present  an  "object  lesson"  before  the  American  people. 
How  is  it  now?  On  the  13th,  I  believe  it  was,  of  November  the 
President  decided  to  issue  some  more  bonds;  and  I  think  it  was 
on  the  14th  that  the  advertisement  appeared  in  the  papers.  From 
November  14  down  to  December  19,  both  days  incliisive,  there 
were  drawn  out  of  the  Treasury  $31,971,533  in  gold;  and  during 
that  time  bonds  to  the  amount  of  $38,570,000  only  had  been  deliv- 
ered. You  can  see  how  rapidly  we  are  gaining  gold.  Between 
the  time  of  advertising  the  bonds  and  the  delivery  of  thirty-eight 
and  a  half  million  of  the  bonds,  they  had  drawn  out  about  $32,- 
000,000  in  gold  with  which  to  pay  for  them.  But  what  was 
the  proportion  of  greenbacks?  Now, you  know  the  cry  is  "the 
1779 


greenback  must  go."  Do  we  find  that  now  the  Treasury  note  is 
being  used  more  than  the  greenback?  No;  beginning  with  No- 
vember 14  and  ending  with  December  19  we  find  that  §30,867,333 
in  greenbacks  has  been  brought  in  and  only  $1,104,300  in  Treasury 
notes — more  than  twenty-five  dollars  to  one  dollar,  whereas  the 
natural  order  would  be  only  about  two  to  one. 

Thus  we  see  that  the  people  who  are  behind  these  measures  were 
able  to  force  the  Government  to  the  repeal  of  the  Sherman  law 
and  stop  the  Treasury  notes  by  showing  how  dangerous  they  were; 
and  now  they  try  to  present  an  "object  lesson "  on  the  greenbacks, 
and  offer  more  than  tAventy-five  dollars  in  the  greenbacks  to  one 
dollar  in  Treasury  notes  for  redemption.  Do  these  figures  not 
show  design? 

The  New  York  banker  is  the  "honest  lago,"  thetrtisted  friend, 
who  first  whispers  suspicion,  then  manufactures  evidence  to  dis- 
credit, and  then  tries  to  destroy.  These  men  have  it  in  their 
power  to  bring  this  influence  to  bear  against  Government  paper, 
and  are  they  not  doing  it?  Yet,  in  the  face  of  this  conspiracy 
against  the  people  of  the  United  States,  some  members  of  this 
Congress  tell  us  that  the  only  reply  Congress  can  make  to  this  or- 
ganized band  to  assume  the  attitude  of  the  child  Samuel,  and  say, 
"Speak!  for  thy  servant  heareth."  Ah,  Mr.  Chairman,  if  in  the 
White  House  we  had  the  Andrew  Jackson  who  was  once  there, 
he  would  say:  "By  the  Eternal!  the  rights  of  the  people  are 
dearer  than  the  interests  of  Wall  street! "  [Applause.]  But  it 
seems  that  the  only  reply  that  the  Executive  is  able  to  give  is: 
"  Whatsoever  thou  shalt  ask  of  me,  I  will  give  it  thee,  unto  the 
half  of  my  kingdom." 

Mr.  Chairman,  I  do  not  speak  in  the  sense  of  personal  criticism. 
Men  in  official  position  are  responsible  for  their  conduct;  every 
act  and  utterance  is  a  proper  subject  for  discussion.  And  I  ask, 
is  the  President,  in  the  measures  that  he  is  presenting,  regarding 
the  interests  of  our  people  on  this  financial  question,  or  is  he 
shaping  his  policy  to  suit  the  interests,  the  wishes,  and  the  de- 
mands of  those  who  conspire  against  the  credit  of  the  Government 
and  against  the  welfare  of  the  people? 

And,  Mr.  Chairman,  this  brings  me  to  the  first  objection  I  have 
to  make  to  this  bill;  and  the  objection  applies  to  all  bank  notes, 
whether  they  are  issued  under  State  or  Federal  control.  Re-' 
member  it  is  the  bankers  who  are  asking  for  this  measure.  The 
"  Baltimore  plan  "  was  proposed  by  a  bankers'  association.  They 
ask  you  to  allow  them  to  issue  the  paper  money  of  the  country. 
Do  they  ask  it  because  they  are  interested  merely  in  the  pixblic 
good?  Have  they  no  desire  for  profit?  Let  me  call  your  atten- 
tion to  the  language  of  Mr.  Williams,  the  president  of  the 
Chemical  National  Bank  of  New  York.  He  was  before  the  com- 
mittee advocating  the  funding  of  the  greenbacks  into  3  per  cent 
bonds.     He  said: 

United  States  bonds  bearing  a  rate  of  interest  not  over  3  per  cent — and 
my  idea  would  be  that  a  3  per  cent  bond  would  be  the  most  advisable  to  issue, 
as  it  would  never  go  below  par — and  that  these  bonds  should  be  received  as 
security  for  circulating  notes  of  national  banks  on  a  basis  of  par  for  the  bonds, 
the  Government  having  a  first  lien  also  on  the  assets  of  the  banks  as  addi- 
tional security.  No  further  margin  need  be  required,  as  the  security  would  be 
ample.  These  notes  should  be  redeemable  in  the  city  of  New  York,  and  when 
issued  in  sufficient  volume  and  being  readily  convertible  would  furnish  ade- 
quate elasticity  to  the  currency,  which  is  so  much  desired,  but  in  no  event 
should  be  made  subordinate  to  that  of  security. 
1779 


10 

Now  note: 

The  tax  on  the  circulation  of  national  banks  shonlrl  at  onco  be  removed, 
and  it  will  be  readily  seen  that  with  a  3  per  cent  bond  at  par  and  no  tax  to 
be  paid  on  the  circulation  there  will  be  some  inducement  for  national  banks 
as  a  matter  of  profit  to  take  out  circulating^  notes. 

Mr.  Chairman,  I  assert  as  my  honest  con\nction  that  the  only- 
reason  why  the  national  banks  desire  to  issne  paper  money  at  all 
is  because  of  the  profit  to  be  derived  from  it.  No  person  in  com- 
mittee or  elsewhere  has  suggested  that  they  would  ever  issue  a 
note  tmless  there  was  profit  in  it.  So  it  is  a  mere  proposition  pre- 
sented here,  shall  we  make  the  issne  of  notes  profitable  to  the 
banks,  or,  in  other  words,  shall  we  make  it  profitable  for  them  to 
issue  money  at  all? 

Now.  yoti  may  call  it  what  you  like.  Mr.  Chairman,  but,  stripped 
of  all  its  verbiage,  the  proposition  to  allow  banks  to  issue  money 
is  equivalent  to  a  proposition  that  the  Government  shall  loan 
money  to  the  banks  at  a  low  rate  of  interest,  or,  as  Mr.  Williams 
suggests,  at  no  interest  at  all.  and  let  them  reloan  it  at  whatever 
rate  of  interest  they  can  secure.  I  insist  that  there  is  no  differ- 
ence in  ]irinci]ile  between  the  national  banking  system  as  now  ex- 
isting, between  the  banking  systems  as  in-oposed  by  this  bill, 
between  the  system  proposed  by  Mr.  Williams,  between  any 
of  these  plans,  and  the  subtreasury  plan  pi'oposed  by  some  of  the 
farmers.  The  principles  are  identical.  It  is  only  a  question  of 
security  and  to  whom  we  shall  loan. 

Mr.  Chairman,  if  I  had  no  other  reason  for  opposing  this  bill  I 
would  be  opposed  to  it  because  it  says,  in  substance,  to  the  farmers 
and  to  others,  "You  cannot  borrow  money  from  the  Government 
at  1  per  cent  or  at  H  per  cent  or  at  any  per  cent,  but  we  will  loan 
to  the  banker  in  your  community  at  a  nominal  rate,  and  he  will 
loan  to  you  at  8  or  10  per  cent  or  at  whatever  he  is  able  to  collect." 
I  say.  if  there  was  nothing  else  objectionable  in  the  bill,  that  ob- 
jection alone  would,  to  my  mind,  be  insurmountable  and  condemn 
the  whole  proposition. 

Men  talk  of  the  preservation  of  law  and  order 

Mr.  BLACK  of  Illinois.  Will  the  gentleman  yield  to  me  for  an 
inquirvV 

Mr.  BRYAN.     With  pleasure. 

Mr.  BLACK  of  Illinois.  Is  it  not  true  that  the  farmer,  by  tak- 
ing position  with  other  farmers  or  financiers,  can,  and  very  fre- 
quentlv  does,  become  a  stockholder  in  national  banks? 

Mr.  BRYAN.     Yes,  sir. 

IVIl'.  BLACK  of  Illinois.  So  there  is  nothing  against  the  farmer 
having  tliis  power — nothing  to  prevent  him  having  it  the  same  as 
anyone  else? 

Mr.  BRYAN.  Nothing  at  all  if  he  wnll  go  into  the  banking 
business. 

Mr.  PENCE.     But  not  as  a  farmer,  only  as  a  banker. 

Mr.  BRYAN.  I  have  heard  before  the  argument  suggested  by 
the  incjuiry  of  the  gentlenian  from  Illinois,  and  it  would  justify  a 
subsidy  to  lawyers,  on  the  theory  that  everybody  can  become  a 
lawyer  if  he  wants  to.  It  would  justify  a  subsidy  to  any  other 
class  of  people  on  the  ground  that  anybody  can  go  into  that  busi- 
ness. 

Mr.  WILLIAMS  of  Mississippi.    May  I  ask  the  gentleman  a 
question? 
1779 


11 

Mr.  BRYAN.     Certainly. 

Mr.  WILLIAMS  of  Mississippi.  Will  the  gentleman  from  Ne- 
braska please  explain  clearly  to  the  House  how  he  identifies  the 
exercise  of  the  natural  right,  inherent  in  any  natural  or  incorpo- 
rated person,  to  issue  his  promissory  note  to  anybody  who  chooses 
to  take  it,  with  a  loan  from  the  Government  of  the  money  pro- 
vided by  the  people  for  the  support  of  the  G-overnment? 

Mr.  BRYAN.  I  am  glad  the  gentleman  has  asked  the  question, 
because  it  recalls  to  my  mind  a  point  that  I  had  myself  overlooked, 
and  I  think  I  can  in  a  word  make  it  so  plain  to  him  that  he  will 
not  ask  the  question  again.  If  he  wants  to  borrow  money  he  has 
a  right  to  issue  his  note,  and  he  has  a  right  to  issue  it  to  any  per- 
son who  will  take  it  and  let  him  have  the  money.  But  in  prac- 
tice, when  he  finds  a  man  who  will  take  the  note  and  let  him 
have  the  money,  he  finds  a  man  -^ho  will  make  him  pay  interest 
upon  it.  So  that  the  natural  right  that  men  have  is  a  right  to 
issue  their  notes /or  money  and  to  pay  interest  on  them.  But  the 
right  AA'hich  you  ask  for  the  bank,  on  a  proposition  similar  to  this, 
is  a  right  to  issue  its  notes  as  money  and  draw  interest  on  them. 

Mr.  WILLIAMS  of  Mississippi.     Will  the  gentleman  permit  me? 

Mr.  BRYAN.     Certainly. 

Mr.  WILLIAMS  of  Mississippi.  If  the  gentleman  will  allow  me 
to  say  so,  he  is  but  obscuring  the  issue  when  he  makes  it  a  ques- 
tion of  interest.  The  question  I  asked  was  based  upon  my  natural 
right,  whether  as  an  individiial  or  a  corporation,  to  issue  my  promis- 
sory note,  with  or  without  interest,  to  anybody  who  is  willing  to 
take  it,  not  invoking  the  power  of  the  Government  to  make  him 
take  it  by  a  legal  tender  enactment,  biit  leaving  him  free  to  take 
it  as  he  chooses.  The  question  of  interest  or  no  interest  cuts  no 
figure  at  all  in  the  controversy. 

Mr.  BRYAN.  I  think  the  illustration  I  have  given  covers  the 
case  absolutely,  for  the  tax  is  equivalent  to  interest.  The  bank 
does  not  ask  the  privilege  of  circulating  its  notes  as  other 
people  circulate  theirs.  Nor  does  a  bank's  issue  circulate  on 
the  credit  of  the  bank,  but  on  the  faith  of  the  Govern- 
ment which  authorizes  and  controls  the  bank.  Bank  notes 
are  accepted  on  the  supposition  that  they  are  safe  because  the 
bank  is  expected  to  comply  with  the  law,  but  an  individual's  note 
can  only  circulate  on  his  own  credit.  The  bank  asks  the  privilege 
of  circulating  its  notes  as  money,  a  right  which  no  individual  has, 
and  a  right  which  you  would  have  to  give  to  every  individual  who 
would  give  like  security  in  order  to  make  the  law  ecxual  in  its 
operation. 

Mr.  WILLIAMS  of  Mississippi.  If  the  gentleman  will  excuse 
me,  I  thought,  according  to  his  definition  of  money  at  any  rate, 
the  legal-tender  quality  was  altogether  essential.  I  thought  again 
and  again  I  had  understood  him  to  say  that  was  what  made  money. 
Then  the  gentleman  says  this  man  wants  to  circulate  his  promis- 
sory notes  as  money  without  the  legal-tender  quality  which  would 
make  it,  according  to  the  gentleman's  definition,  money.  Is  not 
that  the  play  of  Othello  with  Othello  left  out? 

Mr.  BRYAN.  Well,  Mr.  Cliairman,  I  will  not  discuss  with  thp 
gentleman  the  technical  meaning  of  words.  I  do  believe  that 
there  ought  to  be  no  money  except  a  legal-tender  money,  and  no 
money  except  what  the  Government  issues.  That  is  my  opinion; 
but  the  bank  wants  to  issue  a  paper  to  be  used  as  money,  to  cir- 
1779 


12 

dilate  as  money,  for  the  profit  there  is  in  it  to  the  bank;  and  I  in- 
sist that  when  the  bank  asks  it,  it  is  asking  a  right  whicli  nobody 
else  has,  and  it  is  asking  of  the  Government  a  favoritism  whicli 
the  Government  can  not  afford  to  show. 

Mr.  Chairman,  we  talk  of  the  necessity  of  suppressing  riot,  and 
of  quelling  mobs.  It  is  necessary.  Law  and  order  must  be  pre- 
served at  any  price,  because  there  can  be  no  security  to  life,  lib- 
erty, or  property  without  law  and  order;  but,  Mr.  Chairman, 
when  these  gentlemen  propose  the  preservation  of  law  and  order, 
by  sowing  the  seeds  of  discontent,  and  then  bringing  the  Army 
near  to  the  cities  to  suppress  the  manifestations  of  discontent, 
I  want  to  propose  a  more  patriotic  plan.  I  want  to  i)ropose  the 
only  real  remedy,  namely,  that  we  take  away  the  causes  of  dis- 
satisfaction and  cease  to  scatter  the  seeds  of  discontent. 

Favoritism  shown  by  the  Government  breeds  more  discontent 
to-day  than  all  other  things  combined.  The  love  of  justice  is  the 
deepest  sentiment  in  the"  human  heart,  and  just  as  long  as  men 
see  that  others  are  treated  as  they  are,  they  can  bear  almost  any 
condition.  But,  sir,  when  men  see  that  a  few  are  favored  and, 
by  special  class  legislation,  are  taken  out  of  general  conditions 
and  given  unfair  advantages;  when  they  see  these  abuses  of  gov- 
ernment, then  they  begin  to  feel  dissatisfied  and  to  clamor  against 
certain  laws,  and  some  even  blindly  begin  to  clamor  against  gov- 
ernment itself,  confusing  the  Government  ^^dth  obnoxious  laws. 

Mr.  Chairman,  we  read  in  holy  wi-it  that  when  the  father  of 
Joseph  gave  to  him  a  coat  of  many  colors,  his  brethren  hated  him 
because  the  father  had  shown  his  special  affection  for  him;  and 
favoritism  to-day  breeds  discontent  among  citizens  as  effectually 
as  it  did  four  thousand  years  ago  among  the  brethren  who  kept 
their  flocks  in  Dothan. 

If  you  put  a  splinter  into  the  flesh  it  will  fester;  nature  will  try 
to  expel  it.  If  you  take  it  out  the  wound  will  heal;  but  if  you  keep 
that  si)linter  there  the  corruption  vdll  spread  over  the  whole  sys- 
tem until  sometimes  life  itself  is  sacrificed. 

Let  this  little  splinter  be  inserted  in  our  political  system  and 
others  will  demand  like  favoritism.  The  corruption  will  spread 
throughout  our  body  politic,  and -on  every  hand  we  shall  see  the 
effects  of  the  vicious  principle  which  we  are  asked  to  declare  as  a 
right  principle  in  the  case  of  banks. 

Mr.  Chairman,  I  believe  that  if  to-day  an  appropriation  were 
proposed  for  the  spread  of  smallpox  throughout  the  United  States 
it  would  be  far  less  dangerous  to  the  people  of  the  country  than 
legislation  like  this,  which  takes  up  a  particular  class  of  our  peo- 
ple and  applies  to  them  a  vicious  principle,  with  all  the  conse- 
quences that  must  necessarily  follow  from  it;  because  when  the 
smallpox  is  raging  in  the  country,  it  is  an  open  and  obvious  dis- 
ease, and  people  may  escape  from  it,  but  the  influence  of  this 
pleasant  but  poisonous  principle  is  such  that  other  people  insist 
upon  having  it  applied  to  them  because  it  has  been  applied  to 
somebody  else.  And  therefore,  Mr.  Chairman,  I  do  not  believe 
that  we  can  afford  to  give  this  valuable  privilege — because  it  vsdU 
not  be  used  unless  it  is  valuable — to  a  particular  class  of  our  peo- 
ple. If  the  brethren  of  Joseph  complained  because  his  father  gave 
him  the  insignia  of  favoritism  without  his  asking,  what  will  be 
the  feeling  when  this  favor  is  given,  not  as  a  voluntarj'  token 
of  parental  affection,  but  because  of  the  demand  made  by  the 
1779 


13 

banks  for  it,  a  demand  backed  iip  by  all  the  influence  wMch  they 
can  bring  to  bear. 

Mr.  WILLIAMS  of  Mississippi.  Is  not  the  gentleman  from 
Nebraska  perfectly  aware  of  the  fact  that  to-day  a  great  majority 
of  the  national  banlcs  and  other  banks  of  this  country  are  oppos- 
ing this  very  identical  bill? 

Mr.  BRYAN.     Yes;  a  great  many  of  them  are. 

Mr.  WILLIAMS  of  Mississippi.  Then  why  does  the  gentleman 
say 

Mr.  BRYAN.  I  intend  to  speak  of  that  in  a  moment,  and  per- 
haps I  may  as  well  take  it  iip  now,  as  the  gentleman  has  called, 
attention  to  it.  The  second  objection  which  I  have  to  this  bill  is 
that  the  moment  you  vest  in  a  private  individual  or  corporation 
a  particular  or  valuable  right  or  privilege  you  make  him  or  it 
the  enemy  of  any  law  that  seeks  to  take  away  the  privilege.  Of 
course  the  national  banks  vnll  object  to  any  law  which  they  do 
not  think  as  good  as  the  one  they  have;  and  there  is  a  special 
reason  whj^  they  may  object  at  this  time  to  this  bill;  they  may 
think  that  by  waiting  imtU  next  year,  when  the  Republicans 
have  a  large  majority  in  Congress,  they  can  get  a  better  bill  than 
they  can  get  now.  That  is  one  reason  why  the  national  banks 
may  object  to  this  particular  bill  at  this  time. 

Mr.  WILLIAMS  of  Mississippi.  Did  I  understand  the  gentle- 
man from  Nebraska  a  moment  ago  to  say  that  we  did  not  give 
them  that  as  a  voluntary  act,  but  on  their  demand? 

Mr.  BRYAN,  I  am  not  speaking  of  this  particular  bill,  but  of 
the  right  to  issue  paper  money.  And  I  want  to  call  attention, 
Mr.  Chairman,  to  the  difference  between  the  principle  enunciated 
by  the  first  Democratic  President  and  the  principle  enunciated  by 
the  last  Democratic  President.  Mr.  Jefferson  gave  this  advice  in 
1819:  "  Interdict  forever  to  both  the  State  and  National  Govern- 
ments the  power  of  establishing  any  paper  banks." 

Mr.  Jefferson's  idea  was  to  annihilate  every  form  of  bank  paper 
and  to  prevent  its  ever  being  revived.  Mr.  Cleveland  on  the  other 
hand  says  in  his  message  sent  to  Congress  at  the  beginning  of  this 
session:  "The  absolute  divorcement  of  the  Government  frona  the 
business  of  banking  is  the  ideal  relationship  of  the  Government  to 
the  circulation  of  the  cm-rency  of  the  country."  Mr.  Cleveland 
thinks  that  the  issue  of  paper  money  is  a  function  of  the  banks  and 
that  the  Government  ought  to  go  out  of  the  banking  business. 

Mr.  BLACK  of  Georgia.    Will  the  gentleman  permit  me? 

Mr.  BRYAN.  In  a  moment.  Mr.  Jefferson  thought  that  the 
issue  of  paper  money  was  more  properly  a  function  of  the  Govern- 
ment, and  that  the  banks  ought  to  go  out  of  the  governing  busi- 
ness; and  I  am  not  ashamed  to  say  that  I  would  rather  stand  with 
Thomas  Jefferson  and  drive  the  banks  out  of  the  governing  busi- 
ness than  to  stand  jvith  Grover  Cleveland  and  drive  the  Govern- 
ment out  of  the  business  of  issiiing  paper  money.     [Applause.] 

Now,  Mr.  Chairman,  when  I  say  that  banks  will  attempt  to  pre- 
vent any  legislation  hostile  to  them,  I  do  not  say  that  they  are 
worse  than  others.  In  all  our  legislation  we  must  remember  that 
people  are  human,  that  men  are  much  alike,  and  that  they  are 
very  apt  to  look  after  their  own  interests  rather  than  the  interest 
of  somebody  else.  It  is  not  strange  that  when  you  have  given  to 
the  banks  a  valuable  privilege  they  will  try  to  prevent  that  privi- 
lege from  being  taken  away  from  them. 
1779 


14 

Mr.  BLACK  of  (xeorf^ia.  Did  Mr.  jetfersou  favor  the  issue  of 
paper  moiicv  by  the  Government 

Mr.  BRYAN.     Yes,  sir. 

Mr.  BLACK  of  ( jeorgia.  Excejit  on  emergency,  and  its  redemp- 
tion to  be  provided  for  by  the  revenue  of  a  tax. 

Mr.  BRYaN.  I  will  quote  what  he  says.  The  Supreme  Court, 
nowe\er.  has  decided  since  that  Government  paper  can  be  made 
a  legal  tender. 

Mr.  BLACK  of  Georgia.  We  are  not  talking  about  the  deci- 
sion of  the  Supreme  Court,  but  we  are  talking  about  Jefferson. 
Did  he  hold  the  same  idea  that  you  have  advanced? 

Mr.  BRYAN.  Let  me  read  his  idea.  I  have  quoted  to  you 
what  he  said  about  interdicting  to  both  the  State  and  National 
Governments  the  power  to  establish  paper  banks.  He  said  he  was 
opposed  to  paper  banks;  he  even  said  that  he  believed  they  were 
more  dangerous  than  a  standing  armj^  and  in  that  I  fully  agi'ee 
with  him.  I  do  not  believe  that  a  standing  army  can  drive  the 
Government  to  legislation. 

Mr.  BLACK  of  Georgia.    Does  he 

Mr.  BRYAN.  Wait  a  minute.  If  the  gentleman  will  pardon 
me,  I  will  reach  that  point  dii'ectly.  I  do  not  believe  that  a  stand- 
ing army  can  menace  the  Government  as  much  as  the  association 
of  all  our  great  moneyed  interests  in  favor  of  or  against  a  par- 
ticular law.     Now,  I  will  read  what  Mr.  Jefferson  said 

iMr.  BLACK  of  Georgia.  I  thought  you  were  taking  him  as 
your  leader? 

Mr.  BRYAN.  I  was  quoting  his  words  against  paper  money 
issued  by  banks.  Now,  I  will  read  what  he  said  about  Govern- 
nient  paper. 

In  a  letter  wi'itten  from  Monticello,  June  24, 1813,  to  John  W. 
Epps,  Mr.  Jefferson  said: 

This  is  equivalent  to  borrowing  tliat  sum,  and  yet  the  vendor,  receiving 
payment  in  a  medium  as  effectual  as  coin  for  his  purchases  or  payments,  has 
no  claim  to  interest.  And  so  the  nation  may  continue  to  issue  its  bills  as  lar 
as  its  wants  require  and  the  limits  of  the  circulation  will  admit.  *  *  *  g^t 
this,  the  only  resource  which  the  (Tovernment  could  command  with  certainty, 
the  States  have  unfortunately  fooled  away,  nay,  corruptly  alienated  to  swin- 
dlers and  shavers,  under  the  cover  of  private  banks.  *  *  *  The  States 
should  be  applied  to,  to  transfer  the  right  of  issuing  circulating  paper  to  Con- 
gress exclusively,  in  perpotuum,  if  possible,  but  duriag  the  war  at  least,  with 
a  saving  of  charter  rights. 

He  wanted  the  States  to  confer  upon  the  Federal  Government 
the  exclusive  right  to  issue  paper  money. 

Mr.  WARNER.     Was  that  a  legal  tender? 

Mr.  WILLIAMS  of  Mississippi.     To  issue  what? 

Mr.  BLACK  of  Georgia.  He  said  he  wanted  the  people  of  the 
States  to  transfer  that  right. 

Mr.  BRYAN.     Yes,  sir. 

Mr.  BLACK  of  Georgia.  But  he  says  that  the  right  resides  in 
the  States. 

Mr.  BRYAN.  I  am  not  discussing  the  right.  I  am  discussing 
the  policy  of  establishing  banks  of  issue.  State  or  national. 

Mr.  BLACK  of  Georgia.     We  are  discussing  Mr.  Jefferson. 

Mr.  BRYAN.  I  am  discussing  the  words  which  I  qiioted  from 
Mr.  Jeffei-son. 

Mr.  BLACK  of  Georgia.  But  the  gentleman  is  not  discussing 
the  other  view.     I  thought  th9  gentleman  took  him  for  a  leader, 

1779 


15 

"but  he  seems  to  only  follow  upon  those  positions  in  which  he 
agrees  with  Jefferson. 

Mr.  BRYAN.  I  hope  the  gentleman  will  not  expect  me  to  quote 
everything  Mr.  Jefferson  said  on  all  subjects  when  I  quote  him  in 
siipport  of  one  proposition. 

Mr.  WARNER.     Was  that  legal  tender? 

Mr.  WILLIAMS  of  Mississippi.     Read  the  language  again. 

[Mr.  BRYAN  read  again  the  language  of  Jefferson,  just  given.] 

Mr.  BRYAN.  Now,  does  the  gentleman  from  Mississippi  wish 
to  ask  a  question? 

Mr.  WILLIAMS  of  Mississippi.  I  merely  desired  to  have  the 
language  of  Mr.  Jefferson  read  again. 

Mr.  WARNER.  What  I  want  to  ask  the  gentleman  is  whether 
he  for  one  moment  suggests  that  those  remarks  of  Jefferson  ap- 
plied to  i)a,per  having  any  legal-tender  quality  whatever,  or  to  any 
such  paper  as  that  which  the  gentleman  is  now  advocating? 

Mr.  BRYAN.  Mr.  Chairman,  I  have  not  quoted  Jefferson  as 
sustaining  the  idea  of  legal-tender  paper,  nor  is  it  necessary,  in 
order  to  make  the  argument  good,  to  find  that  Mr.  Jefferson  ever 
did  approve  any  such  idea.  I  do  not  know  whether  he  ever  advo- 
cated or  opposed  legal-tender  paper.  I  have  qiioted  Mr.  Jefferson 
as  against  State-bank  paper  and  national-bank  paper,  and  I  have 
quoted  him  as  in  favor  of  the  Government  exclusively  issuing 
paper  to  circulate  as  money.  Whether  that  paper  is  to  be  a  legal 
tender  or  not,  is  another  question  on  which  I  shall  speak  later. 
How  much  time  have  I  remaining,  Mr.  Chairman? 

The  CHAIRMAN.  The  gentleman  has  twenty  minutes  remain- 
ing. 

Mr.  SPRINGER.  Mr.  Chairman,  I  ask  unanimous  consent 
that,  if  no  other  gentleman  desires  to  speak  this  afternoon,  the 
gentleman  from  Nebraska  be  allowed  to  occiapy  sufficient  time  to 
conclude  his  remarks. 

The  CHAIRMAN.  There  is  no  other  speaker  on  the  list  for  this 
afternoon. 

There  was  no  objection  to  the  request  of  Mr.  Springer. 

Mr.  BRYAN.  I  am  grateful  to  the  gentleman  from  Illinois 
[Mr.  Springer]  and  to  the  members  of  the  committee  for  this 
courtesy.  I  had  not  intended  to  occupy  much  time  this  afternoon, 
because  the  House  has  indulged  me  very  generously  on  former 
occasions,  and  also  because  my  argument  made  on  this  floor  on 
the  5th  of  last  June  covers  much  of  the  ground  I  am  now  going 
over.  However,  the  questions  which  have  been  asked  have  occu- 
l>ied  a  considerable  portion  of  the  time  which  I  should  other- 
wise have  devoted  to  the  direct  discussion  of  this  bill. 

Mr.  Chairman,  I  was  quoting  what  Mr.  Jefferson  said  in  regard 
to  the  danger  of  these  banks.  I  believe  that  it  is  a  question  which 
this  Congress  ought  seriously  to  consider,  whether  the  establish- 
ment of  these  banks  of  issue,  State  or  national,  tends  to  build  up 
a  class  hostile  to  any  change,  and  makes  it  difficult  for  the  people 
to  withdraw  from  the  experiment  if  they  become  tired  of  it.  That 
is  my  second  objection  to  any  sort  of  a  bank  of  issue;  for,  while 
other  i^eople  will  look  after  their  rights  and  their  interests — and 
it  is  proper  for  people  to  look  after  their  own  rights  and  to  protect 
their  own  interests — while  other  people,  I  say,  atT*  a  rule,  will  op- 
pose any  legislation  which  interferes  with  their  rights  or  interests, 
there  is  no  class  on  earth  of  its  size  that  can  bring  such  tremen- 
1779 


1;; 

dons  intlnence  to  bear  \ipon  le.u'islation  as  the  bankers.  For  they 
not  only  have  the  power  of  concentrated  capital  but  they  have 
the  leverage  of  the  obligations  which  they  hold,  by  which  they 
can,  if  they  will,  without  acting  openly,  almost  coerce  those  who 
bttrrow  of  them. 

But  there  is  another  objection.  I  am  opposed  to  banks  of  issue, 
State  or  national,  because  I  do  not  believe  we  can  safely  give  to 
private  corporations  the  power  to  control  the  volume  of  the  paper 
currency  of  the  country.  Tliis  bill  has  for  its  purpose  nothing 
less  than  the  surrender  to  the  banks  of  issue  of  the  control  of  all 
the  paper  money  to  be  used — because  our  silver  certificates  and 
gold  certificates  are  not,  in  one  sense,  paper  money,  they  are  sim- 
ph-  certificates  of  deposit.     Now,  can  that  safely  be  done? 

Mr.  Chairman,  we  who  believe  in  the  bimetallic  idea,  and,  in 
fact,  nearly  all  those  who  believe  in  metallic  money  at  all,  favor 
it  mainly  for  the  reason  that  the  supply  in  the  world  is  so  large, 
compared  with  the  annual  addition— that  annual  addition  being 
determined  by  the  supply  from  the  mines — as  to  prevent  any  sudden 
expansion  or  contraction  of  the  currency.  That  is  the  main  argu- 
ment in  favor  of  a  metallic  currency.  That  is  the  reason  which 
makes  me  believe  in  metallic  money  as  a  base.  I  believe  that  if 
we  leave  the  metallic  idea  undisturbed  by  restrictive  legislation 
the  volume  of  currency  will  be  more  uniform,  and  consequently 
the  A'alue  of  the  dollar  more  stable,  than  it  will  be  under  any 
other  plan. 

There  is  another  way  in  which  you  can  control  the  currency, 
namely,  by  legislation.  There  are  those  who  believe  in  what  they 
call  irredeemable  paper  money,  to  be  regulated  in  volume  by 
legislation.  In  legislative  control  there  are  two  diflSculties  to  be 
met.  First,  there  may  be  a  lack  of  knowledge  on  the  part  of  the 
legislative  body  as  to  how  m\ich  money  is  needed,  a  lack  of  knowl- 
edge of  the  various  factors  which  enter  into  the  supplj-  of  and 
demand  for  money.  Then  there  is  another  difficiilty.  Even  if 
there  is  great  intelligence,  infinite  intelligence,  there  miist  be  as- 
sociated with,  it  absolute  impartiality,  or  else  one  class  will  get  an 
advantage  over  another;  and  my  fear  of  a  money  controlled  en- 
tirely by  legislation  is  that,  as  one  party  or  faction  or  influence 
becomes  dominant,  and  then  another,  they  may  increase  or  de- 
crease the  currency,  inflating  or  contracting  it;  and  by  so  doing 
change  the  value  of  the  dollar,  change  its  i^urchasing  power  and 
therefore  change  the  value  of  all  the  proi^erty  o%vned  by  all  the 
people  who  live  within  the  jurisdiction  of  the  Government. 

Now  that,  to  my  mind,  is  the  danger.  And  yet,  Mr.  Chairman, 
when  I  am  compelled  to  choose  between  the  regulation  of  the  vol- 
ume of  currency  by  legislation  and  regulation  of  it  by  banks  or 
other  private  corporations,  I  shall  without  hesitation  risk  the  dan- 
gers attendant  upon  regiilation  by  the  Government.  The  repre- 
sentative of  the  people  is  answerable  to  them.  He  must  act 
openly.  His  conduct  is  known  and  he  is  responsible  to  his  con- 
stituents. But  when  that  power  is  given  to  private  individuals  or 
private  corporations  they  exercise  it  for  their  profit  and  not  for 
the  public  good.  Having  no  more  knowledge  than  the  legislators 
have,  they  have  an  uuiestrained  desire  to  act  so  that  they  will 
secure  the  greatest  possible  advantage.  Banks  have  combined  in 
the  past;  we  know  that.  Banks  can  combine  again;  we  know 
that.    Banks  will  combine  in  the  future  whenever  they  can  secure 

1779 


17 

a  profit  by  it.  No  one  can  dispute  that  who  will  read  the  testi- 
mony of  the  bankers  themselves,  for  they  tell  lis  that  we  miTst 
make  the  issue  profitable.  But  if  they  find  that  by  siirrendering 
their  paper  issiies  suddenly  they  can  make  more  jirofit,  are  we 
not  bound  to  believe  they  will  do  if? 

This  nnist  be  so  if  we  believe  the  testimony  of  the  bankers 
themselves.  And  this  bill  not  only  gives  to  the  banks  the  power 
to  control  the  ciirrency,  but  it  takes  away  every  safeguard  that 
the  present  law  i)rovides  to  prevent  the  unfair  use  of  that  i)ower. 
The  present  law  provides  that  the  banks  can  not  surrender  in  the 
aggregate  more  than  $3,000,000  in  any  single  month,  and  that 
any  bank  after  surrendering  any  part  of  its  circulation  can  not  take 
out  more  for  six  months.  But  this  bill  wii^es  out  those  restric- 
tions. More  than  that.  For  fear  the  banks  may  not  be  able  to  act 
suddenly,  this  bill  provides  that  the  Secretary  of  the  Treasury 
must  keep  on  hand  blank  notes,  ready  to  be  issued  on  demand. 
This  bill  not  only  surrenders  to  the  banks  the  entire  control  over 
the  currency,  but  it  wipes  out  every  restriction  upon  the  exercise 
of  the  power.  By  this  bill  we  simply  say  to  the  banks.  "  Noav  you 
have  absolute  control  of  the  volume  of  currency;  please  be  merci- 
ful unto  us." 

Mr.  Chairman,  I,  for  one,  am  not  willing  to  surrender  this  at- 
tribute of  sovereignty  to  national  banks  nor  to  State  banks  nor 
to  any  private  individuals  whatever.  I  am  no  more  willing  to 
give  tliem  the  right  to  contract  and  expand  the  currency  at  will 
than  I  am  to  farm  out  the  right  to  collect  our  taxes  or  to  enact 
penal  statutes. 

Mr.  SPRINGER.     Will  the  gentleman  allow  me  a  question? 

Mr.  BRYAN.    With  pleasiire. 

Mr.  SPRINGER.  The  gentleman  states  that  this  bill  gives  to 
the  banks  the  i)ower  to  enlarge  or  contract  the  currency  at  their 
will.  Will  he  tell  us  how  the  banks  can  enlarge  the  volume  of 
currency  unless  there  are  some  i^ersons  who  want  to  borrow  the 
money — persons  who  come  to  the  bank  and  take  it  out?  And  how 
can  the  banks  contract  the  currency  unless  some  iDersons  come  to 
the  banks  and  x^ay  their  debts?  How  can  the  currency  be  expanded 
unless  people  who  want  the  money  and  can  use  it  come  to  the 
banks  and  take  it  out? 

Mr.  BRYAN.  The  gentleman's  question  is  partly  pertinent. 
Under  natural  conditions  what  he  says  is  true — that  expansion  or 
contraction  would  depend  upon  the  demand.  But,  Mr.  Chair- 
man, whenever  the  banks  found  that  they  could  secure  a  greater 
profit  by  suddenly  drawing  in  the  money  they  had  out  and  pre- 
senting it  for  cancellation  I  have  no  doubt  they  would  do  it. 

Mr.  SPRINGER.  Under  this  bill  the  banks  would  have  no 
more  use  for  money  if  the  people  did  not  want  it  than  they 
would  for  "the  fifth  wheel  to  a  wagon."  You  might  give  the 
banks  a  thousand  millions  of  currency,  and  it  would  simply  lie 
in  their  vaiilts  unless  persons  wanted  to  use  that  money  and 
went  to  the  banks  and  drew  it  out. 

Mr.  BRYAN.  You  can  stimulate  the  use  of  money  by  lowering 
the  rate  of  interest. 

Mr.  SPRINGER.     You  want  it  lowered,  do  you  not? 

Mr.  BRYAN.  I  do;  but  I  do  not  want  the  banks  to  hold  a 
string  to  it.  I  do  not  want  them  to  lower  the  rate  of  interest  at 
one  time  and  raise  it  at  another,  just  as  they  may  choose.  I  do 
1779 2 


18 

not  think  yon  can  trnst  this  power  to  expand  and  contract  the 
cnrrency  to  private  individnuls  without  danger  of  abuse — too 
gi'cat  a  (lan,n-or  for  Congress  to  overh)ok. 

:Mr.  SPRINGER.  The  friends  of  this  bill  regard  the  power  to 
exi)an(l  or  contract  the  cnrrency  as  one  solely  with  the  people, 
who  may  or  may  not  need  money  in  the  transaction  of  their  busi- 
ness. I'lie  banks  themselves  can  not  expand  or  contract.  Only 
the  people  who  need  it,  and  therefore  obtain  it  from  the  banks, 
can  expand  the  currency.  Wlien  the  people  do  not  need  money 
the  civrency  will  be  contracted  by  the  return  of  the  money  to  the 
banks. 

Mr.  BRYAN.  That  is  doubtless  the  ji^dgment  of  those  who 
favor  the  bill.  They  believe  it  will  always  be  profitable  for  the 
banks  to  issue  money  when  it  is  needed  and  to  take  it  in  when  it 
is  not  needed:  but  I  am  not  willing  to  trust  the  banks  to  act  upon 
that  theory  always.  If  at  any  time  they  find  that  by  going  con- 
trarv  to  the  theory  they  can  make  more  money  they  will  do  so. 

Mr.  WILLIAMS  of  "Mississippi.  Will  the  gentleman  permit 
one  further  interru])tion.  and  then  I  will  not  trouble  him  again? 

:Mr.  BRYAN.     Certainly. 

Mr.  WILLIAMS  (^f  Mississippi.  I  suppose  the  gentleman  and 
I  agree  about  one  thing,  namely,  that  the  banks  and  the  bankers 
are  contolled  entirely  by  the  dictates  of  self-interest,  that  there  is 
no  philanthropy  of  any  sort  in  regard  to  their  business  manage- 
ment, and  that  they  would  not  cut  oft"  their  noses  merely  to  spite 
their  faces.  Neither  animosity  nor  philanthropy  is  paramount  in 
the  control  of  the  banking  business.  We  agree  on  that,  I  pre- 
sumed 

Ur.  BRYAN.     Yes. 

Mr.  WILLIAMS  of  Mississippi.  Then  we  agree  about  another 
thing  also,  and  that  is  that  the  market  value  of  money  to  be 
loaned,  at  what  we  call  interest,  depends  on  the  law  of  supi)ly  and 
demand.  Now.  in  view  of  that,  would  it  not  follow  that  the  desire 
of  the  bank  to  utter  its  notes,  T)ased  o.i*,ts  self-interest,  would  in 
turn  be  necessarily  based  on  the  condition  of  the  loan  market  as 
to  tlie  demand  for  loans  and  the  supply  of  loanable  fimds?  In 
other  words,  would  not  the  self-interest  of  the  banker  in  trying 
to  get  the  best  interest  and  the  highest  profit  from  the  conduct  of 
his  bvisiness  make  him  utter  notes  when  there  was  a  demand  for 
notes,  and  therefore  a  higher  rate  of  interest;  and  is  not  the  con- 
verse of  that  also  true,  that  he  woiild  retire  the  notes  when  there 
was  a  small  demand  for  them  and  a  low  rate  of  interest,  and 
would  not  that  work  exactly  and  automatically  in  accordance  with 
the  demands  of  business  and  the  interests  of  the  people  in  connec- 
ti<m  with  it? 

Mr.  BRYAN.  The  statement  of  the  gentleman  from  Mississippi 
in  regard  to  the  law  of  supply  and  demand  must  be  taken  with  a 
considerable  grain  of  allowance.  Where  there  is  a  possibility  of 
combination  the  bankers  can.  to  some  extent,  avoid  the  natural 
law  of  supply  and  demand:  and,  •without  even  conceding  the  gen- 
tleman's prendses.  whenever  the  banks  find  that  they  can  make  a 
greater  profit  by  combining  to  contract  or  expand  the  volume  of 
currency  they  Avill  unquestionably  do  it.  And,  Mr.  Chairman, 
what  I  fear  is  these  times,  when  they  find  it  more  i)rofitable  to 
hurt  the  i)eople  than  at  ordinary  times 

Mr.  WILLIAMS  of  Mississippi.      But  would   the  individual 
banker  so  find? 
r.:9 


19 

Mr.  BRYAN.     Well,  the  banks  can  act  in  concert,  and  tliej^  do. 

Mr.  WILLIAMS  of  Mississippi.  I  do  not  know  of  a  single  his- 
torical instance  of  a  great  nnniher  of  banks  acting  in  concert  in 
regard  to  the  loaning  of  money. 

ilr.  BRYAN.  If  you  will  go  into  any  town  in  this  counti'y  you 
will  find  that  the  banks  agree  upon  a  rate  of  interest  and  the 
hours  of  opening  and  closing,  jjossibly  the  rate  of  discount,  and 
other  things  of  the  same  kind  in  which  they  act  in  concert. 

Mr.  WILLIAMS  of  Mississippi.  I  do  not  mean  that  the  banks 
in  a  little  village,  like  the  cotton  buyers  in  a  little  village  and  the 
merchants,  may  not  make  some  combinations  for  a  short  time  and 
make  a  temporary  profit  thereby,  but  you  assume  as  the  basis  of 
your  argument  that  the  entire  so-called  "  money  power  "  of  the 
country,  tlu'ough  the  banks,  may  combine  to  shut  off  competition. 
I  deny  it  as  a  possibility. 

_Mr.  BRYAN.  If  the  gentleman  will  only  go  so  far  as  he  seems 
willing  to  go.  and  give  all  the  banks  of  the  country  power,  by  in- 
creasing or  decreasing,  in  concert,  the  amount  of  money  that  we 
are  to  have  in  circulation  in  this  country,  then  I  think  he  will  find 
that  he  has  established  a  very  dangerous  system. 

Mr.  WILLIAIMS  of  Mississippi.  Not  if  the  actual  volume  of 
money  is  increased. 

Mr.  BRYAN.  But  the  power  to  increase  would  be  accompanied 
by  the  power  to  diminish. 

Mr.  WARNER.  If  the  gentleman  will  permit  me,  I  imderstand 
him  to  concede,  and  we  all  agree,  that  the  extent  to  which  a  bank 
can  expand  its  circulation  depends  on  the  extent  to  which  people 
wish  to  borrow  money  at  the  interest  it  sees  fit  to  charge.  That 
is  correct,  is  it  not? 

Mr.  BRYAN.  With  that  latter  qualification  as  to  the  interest 
they  see  fit  to  charge,  I  should  say  it  was. 

Mr.  WARNER,  And  the  only  way  the  bank  can  withdraw  the 
circulation  is  by  raising  the  interest  to  such  a  rate  as  shall  compel 
people  or  induce  them  to  bring  the  money  back  to  the  bank  in- 
stead of  keeping  it  out.     Is  not  that  correct? 

Mr.  BRYAN.     Generally  speaking,  I  would  say  yes. 

Mr.  WARNER.  Then,  as  I  understand  it,  the  only  way  that  a 
bank  can  expand  or  contract  its  circulation  is  practically  by  low- 
ering or  raising  the  interest  charged? 

Mr.  BRYAN.  That  is  the  way  it  is  done  generally.  That  is 
one  way.     It  might  draw  in  its  loans  and  refuse  to  loan  naoney. 

Mr.  WARNER.  Could  it  do  that  without  raising  the  interest 
charged? 

Mr.  BRYAN.     Yes;  it  can  refuse  to  loan  the  money  at  all. 

Mr.  WARNER.  You  mean  it  can  hold  the  money  while  it  earns 
nothing? 

Mr.  BRYAN.     Yes. 

Mr.  WARNER.  Then,  do  you  propose  by  law  to  prevent  a 
bank,  or  an  individual,  or  any  other  owner  of  money,  from  loan- 
ing it  at  a  low  rate  of  interest  if  he  wants  to  get  the  monej^  out, 
or  from  refusing  to  loan  it  in  case  he  does  not  consider  the  security 
safe,  or  his  interest  makes  it  more  profitable  to  hold  the  money? 
Do  I  understand  the  gentleman  to  propose  to  regulate  that  by  law? 

Mr.  BRYAN.  Mr.  Cliairman.  I  am  jtist  now  proposing  to  pre- 
vent, if  I  can,  a  law  that  gives  to  the  banks  more  power  than  they 
already  have.  When  we  propose  a  law  which  attempts  to  regu- 
1779 


20 

late  them  in  the  manner  the  gentleman  suggests  it  will  be  time 
enough  to  discuss  that  question;  but  I  am  opposing  now  a  law 
which  would  give  them  any  more  i)ower  over  the  fortunes  of  the 
citizens  than  they  now  possess  as  banks  of  loan  and  discount. 

Mr.  WARNER.  Conceding,  as  I  think  we  all  do,  and  as  the 
gentleman  does  also,  tliat  the  only  means  by  Avhich  a  bank  can 
extend  or  contract  its  circulation  is  by  either  lowering  the  rate  of 
interest  so  as  to  induce  peoi)le  to  take  the  money,  or  by  raising  the 
rate  of  interest  so  as  to  induce  or  coinpel  people  to  bring  in  the 
money — mj'  understanding  is  that  under  those  conditions  the  gen- 
tleman's suggestion  is  either  immaterial  or  else  it  must  involve 
an  interference  by  law  with  tlie  power  ot  banks  or  individuals 
either  to  loan  money  at  a  low  interest  or  to  refuse  to  loan  money 
if  they  do  not  deem  the  secui'ity  sufficient  or  their  interest  sub- 
served by  doing  so. 

Mr.  BRYAN.  Mr.  Chairman,  I  do  not  think  the  gentleman's 
argument  is  at  all  pertinent  to  the  subject  which  I  am  discussing. 
I  am  simply  contending  against  a  law  which  gives  to  them  an  ad- 
ditional power  which  may  be  exercised  with  danger  to  the  com- 
munity. 

Mr.  WARNER.  Does  this  law  give  anyone — individual  or 
corporation — more  power  to  raise  or  to  lower  interest  or  to  refuse 
loans  than  they  at  present  have? 

Mr.  BRYAN.    Not  as  to  the  real  money  they  have  on  hand. 

]Mr.  WARNER.  Or  to  raise  or  to  lower  interest  so  as  to  make 
room  for  or  to  call  back  their  credit  paper? 

Mr.  BRYAN.  It  does  not  limit  any  powers  which  they  now 
have. 

INIr.  WARNER.  Does  it  in  any  way  add  to  the  powers  which 
they  now  have  over  the  very  means  which  we  all  agree — yourself 
among  us — are  the  only  ones  by  which  they  can  expand  or  con- 
tract the  cuiTency? 

Mr.  BRYAN.  It  does  not  add  to  their  powers,  perhaps,  but  it 
gives  them  greater  opportunities  for  exercising  their  powers  by 
alloAxing  tlicm  to  expand  or  contract  the  volume  of  paper  money. 

Mr.  WARNER.  Does  it  give  them  greater  opportunities  for 
exercising  their  powers  except  by  raising  or  lowering  their  inter- 
est rate? 

Mr.  BRYAN.  I  think  the  gentleman  and  I  have  discussed  that 
question  sufficiently.  I  have  already  stated  that  I  am  not  attempt- 
ing to  interfere  with  the  exercise  by  the  banks  of  their  power  to 
loan  the  real  money  which  they  have,  but  I  am  opposed  to  giving 
them  additional  power. 

Mr.  WARNER.  Do  I  understand  the  gentleman  objects  to  dis- 
t'OuntsV 

Mr.  BRYAN.  I  am  not  objecting  to  any  bank  of  loan  and  dis- 
count. I  trust  I  have  made  myself  clear  to  the  gentleman  when 
1  say  that  I  am  opposed  to  giving  them  the  extra  power  of  issuing 
money,  or  what  is  called  money,  of  their  own,  "onth  the  power  to 
let  it  out  or  to  take  it  in  at  will. 

]\Ir.  WARNER.  Are  you  opposed  to  letting  them  charge  more 
or  less  interest,  or  to  letting  them  use  their  own  notes  as  a  facil- 
ity for  loaning  money  to  the  people? 

Mr.  BRYAN.  Mr.  Chairman,  I  hardly  think  the  gentleman 
can  misunder.stand  me.  I  have  used  as  clear  language  as  I  can, 
and  I  think  we  understand  each  other,  even  though  we  do  not 
agree. 

1779 


21 

Mr.  BELL  of  Texas.  If  the  gentleman  from  Nebraska  will  allow 
me,  the  gentleman  from  Mississippi  [Mr.  Williams]  asked  the 
gentleman  from  Nebraska  if  he  could  call  to  mind  any  occasion 
when  there  has  been  a  general  combination  of  bankers  for  the 
purpose  of  effecting  a  decrease  of  the  money  in  circulation.  If 
the  gentleman  will  allow  me,  I  will  call  attention  to  an  occasion 
in  1881  when  the  funding  act  was  pending,  and  the  bill,  as  I  un- 
derstand, passed  this  House  fixing  the  rate  of  interest  on  the  new 
bonds  at  3  per  cent.  The  bankers  went  to  work  and  withdrew 
$18,000,000  of  their  circulation,  and  the  threat  of  Avhat  they  would 
do,  together  with  what  they  had  already  done,  terrified  this  Con- 
gress and  the  country  generally  to  such  an  extent  that  the  Hoiise 
siTrrendered  and  put  the  rate  of  interest  at  4  per  cent,  as  was  de- 
manded by  the  banks  of  the  country,  and  it  was  predicted  that  if 
they  did  not  do  so  general  financial  disaster  would  ensue. 

Mr.  BLAND.  If  the  gentleman  will  allow  me.  I  will  correct 
him.  The  House  and  Senate  had  passed  the  bill,  and  in  the  mean- 
time the  banks  had  surrendered  some  $18,000,000  or  $20,000,000, 
and  terrified  the  President  into  vetoing  it. 

Mr.  BELL  of  Texas.  The  gentleman  is  correct  about  that.  I 
recollect  now  that  that  was  the  fact. 

Mr.  WILLIAMS  of  Mississippi.  It  is  well  enough  for  the  gen- 
tleman from  Nebraska  and  the  gentleman  from  Texas  to  go  on 
record  historically  correct.  Mr.  Carlisle  in  his  statement  before 
the  committee  explains  that.     He  says: 

I  think  tliat  provision  was  inserted  in  the  act  of  1883  on  accoiint  of  particular 
transactions  that  occurred  in  1881  at  a  time  when  the  refunding  bill  Avas 
pendinii'  bef(  ire  Con§;ress,  and  when  a  certain  section  was  put  into  the  bill 
which  required  national  banks  thereafter  taking  out  circulation  to  deposit  3 
per  cent  IJnited  States  bonds  (not  disturbing  any  bonds  then  on  deposit}.  I 
think  there  was  an  impression  throughout  the  country  that  the  effect  of  the 
fifth  section  of  that  bill  would  be  to  compel  national  banks  to  take  out  of  the 
hands  of  the  United  States  Treasurer  the  bonds  which  they  already  had 
there,  and  to  substitute  for  them  3  pei-  cent  bonds;  and  the  consequence  was 
that  within  thirteen  days  the  banks  withdrew  S18,(X)0,(KK).  It  was  feared  that 
there  would  be  a  serious  crisis;  but  the  President,  Mr.  Hayes,  vetoed  the  bill, 
and  the  House  failed  to  pass  it  over  the  veto.  That  was,  I  think,  the  cause  of 
the  insertion  of  that  provision.  It  was  an  extraordinary  case.  It  was  the 
case  of  a  clear  misapprehension  on  the  part  of  the  banks. 

I  deny  that  it  was  by  any  combination  or  any  conspiracy  any 
more  than  when  we  hear  there  is  going  to  be  a  ten-billion-bale  cot- 
ton crop,  on  an  estimate  of  that  sort  we  fly  to  the  market  as  soon 
as  we  can  to  get  rid  of  our  cotton  while  it  is  up. 

Mr.  BLAND.    If  the  gentleman  will  allow  me  to  answer. 

Mr.  BRYAN.     Certainly. 

Mr.  BLAND.  I  know  Mr.  Carlisle  makes  that  statement.  The 
fact  is  that  the  bill  was  pending  here  for  several  weeks,  and  that 
the  banks  could  not  be  under  any  misapi^rehension  about  it.  They 
knew  all  about  it,  for  it  was  pending  here  some  time,  passed  the 
House  and  Senate,  and  in  order  to  get  a  veto  they  surrendered  their 
circulation. 

Mr.  WILLIAMS  of  Mississippi.  I  will  ask  the  gentleman  to 
allow  me  to  read  this  language. 

Mr.  BRYAN.  I  will  ask  you  to  have  it  wn'tten  out  and  I  will 
insert  it  in  my  remarks. 

Mr.  Chairman,  I  have  been  interested  in  this  discussion. 
[Laughter.]  It  is  my  opinion  that  in  the  summer  of  1893  the 
banks  did  act  in  concert  to  bring  influence  to  bear  on  Congress. 
1779 


22 

I  liave  in  my  possession  a  letter  written  by  a  prominent  New 
York  banker  to  one  of  tlie  l^anks  in  nij'  district  urging-  the  impor- 
tance of  using  influence  in  favor  of  unconditional  repeal,  and  I 
received,  just  after  the  passage  of  the  bill,  a  copy  of  a  letter  sent 
out  by  a  number  of  financiers  in  Chicago,  headed  by  a  leading 
banker,  to  the  business  men  throughoiTt  Illinois,  asknig  them  t)n 
a  certain  day.  the  day  of  the  vote,  to  send  telegrams  to  their  Mem- 
bers and  Senators  '•  in  substance  but  not  exactly  as  follows." 
They  did  not  want  them  to  be  exactly  aL.ce.  becaiise  there  would 
be  so  much  sameness,  but  ' '  substantially  as  follows. "'  And  1  knt)W 
that  on  the  day  the  vote  was  taken  (luite  a  number  of  the  mem- 
bers of  this  House,  as  the  result  of  that  notice  so  sent  out.  did  re- 
ceive telegrams  "  in  substance  as  follows;  "  and  I  remember,  and 
perhaps  the  Hoiise  will  remember,  how  yellow  the  desks  looked 
that  day  because  of  the  telegrams  that  were  lying  on  them. 

A  Member.    Like  airtumn  leaves. 

Mr.  BRYAN.  1  remember  one  desk,  not  very  far  from  me, 
which  was  literally  covered  with  these  telegrams.  [Laughter.] 
I  .simply  suggest  this  for  the  edification  of  those  who  may  possibly 
deny  tliat  influence  was  brought  to  bear. 

Mr.  WILLIAJMb  of  Mississippi.  What  was  the  pirrport  of  those 
telegrams? 

Mr.  BRYAN.  They  urged  members  to  vote  for  the  repeal  of 
the  Slierman  law. 

Mr.  WILLL^MS  of  Mississippi.  The  gentleman  \A'ill  not  do  me 
the  injiistice  to  imply  that  I  have  said  the  national  Ijanks  never 
combined  for  the  purpose  of  urging  a  piiblic  measure  or  prevent- 
ing the  passage  of  a  measvire.  What  I  said  was  that  there  never 
had  been  an  instance  of  a  successful  combination  for  the  purpose 
of  contracting  or  inflating  the  currency.     That  is  all. 

Mr.  BRYAN.  Mr.  Chairman,  I  am  not  able  to  answer  from  my 
own  observation,  but  I  point  out  that  these  banks  can  combine, 
and  they  can  be  trusted  to  do  it  where  they  think  it  is  to  their  in- 
terest. 

But  now,  if  I  may  be  pennitted.  I  will  resume  my  argument. 

Mr.  BLAND.  I  would  like  to  have  the  gentleman  read  the 
speeches  of  Thomas  Benton,  where  he  showed  that  the  power  of  the 
United  States  Bank  was  used  in  loaning  and  refusing  loans  for  the 
purpose  of  electing  one  President  over  another. 

Mr.  BRYAN.  I  think  that  is  a  matter  of  liistory:  and  I  may 
say  to  the  gentleman  in  connection  with  that,  that  a  banker  in 
my  State  told  me  that  he  thought  it  was  legitimate  for  a  bank  to 
use  its  loaning  power  to  aid  those  who  were  in  favor  of  le, ;  sla- 
tion  it  favored  and  against  those  who  were  against  leglsiution 
that  it  wanted. 

The  next  objection  to  these  banks  of  issue 

Mr.  BELL  of  Texas.  Will  you  allow  me  to  read  this  author' 'y 
now/ 

Mr.  BRYAN.    If  it  is  brief. 

Mr.  BELL  of  Texas.  Mr.  Chairman,  I  want  to  read  this,  which 
is  a  pretty  good  authoritj-,  in  view  of  the  aiithorities  just  i)re- 
sented.  I  now  read  from  a  speech  made  by  Mr.  Carlisle  eleven, 
twelve,  or  thirteen  years  ago.     Here  is  what  he  said  aliout  it: 

The  two  Houses  of  Congi-ess.  representing  the  aggregate  intiTesv  of  5il,- 
WHWdt  people,  have,  after  fine  deliberation,  passed  a  bill  whicli  the  banks 
have  chosen  to  consider  filjnoxioiis  to  them  and  forthwith — within  thu'teeu 
days— they  have  contracted  the  currency  $ls.7»>:i,340 — 
1779 


23 

Mr.  PENCE.     What  Carlisle? 

Mr.  BELL  of  Texas.  John  G.  Carlisle.  [Laughter.]  (Continu- 
ing reading) — 

and  precipitated  a  crisis  which  would  have  been  disastrous  to  the  country 
had  it  not  lieen  met  by  measures  which  they  had  no  power  to  prevent.  Tlie 
prompt  action  of  the  Secretary  of  the  Treasury  in  purchasing  a  lai'ge  amount 
of  bonds  at  the  city  of  New  York  and  the  course  of  the  Canadian  bants  in 
throwing  |7,<X)0.(KJ()  or  $8,000,000  of  their  loanable  capital  on  the  market,  alone 
prevented  a  catastrophe  from  the  effects  of  which  we  might  not  have  entirely 
recovered  for  many  years. 

The  gentleman  says  he  presented  a  competent  atithority  awhile 
ago.  He  -will  find  from  the  same  authority  that  they  contracted 
the  currency  §18,000,000  in  thirteen  daj's.  In  his  statement  in 
this  report  Mr.  Carlisle  does  not  deny  that  they  contracted  the 
currency. 

Mr.  WILLIAMS  of  Mississippi.  Nor  do  I  deny  it:  but  what 
Mr.  Carlisle  says  is  that  the  manner  in  which  they  came  to  con- 
tract it  was,  as  he  thinks,  through  a  misapprehension  of  the  law, 
the}'  became  frightened  lest  they  should  not  be  able  to  buy  the 
bonds  the  act  required. 

Mr.  BLAND.  Does  the  gentleman  insist  that  these  banks  mis- 
apprehended the  law? 

Mr.  BRYAN.  If  the  members  of  the  House  are  willing  that 
this  discussion  shall  proceed  I  do  not  object. 

Mr.  WILLIAMS  of  Mississippi.  Will  the  gentleman  allow  me 
to  insert  this  statement?  I  will  not  read  it.  bat  will  just  say  what 
he  said  was  "I  do  not  deny  that  a  contraction  took  place."  Nor 
do  I.  Just  the  same  as  when  the  cotton  x^lanters  will  put  an  im- 
mense crop  upon  the  market  if  they  become  afraid  that  the  price 
will  go  down.  The  bankers  became  frightened  lest  they  woiild 
not  be  able  to  comply  with  the  law,  and  they  surrendered  their 
circulation  and  retired  from  biisiness  down  to  the  level  where  they 
might  be  able  to  comply  with  the  law.  Now,  that  is  Mr.  Carlisle's 
statement.  I  do  not  want  Mr.  Carlisle  to  be  put  in  the  attitude 
of  saying  that  they  did  contract  the  currency  and  then  having  him 
put  in  the  attitude  at  another  time  of  saying  that  they  did  not 
contract  it. 

Mr.  BELL  of  Texas.  He  gives  one  reason  in  this  statement,  and, 
according  to  your  statement,  in  this  report  gives  another. 

Mr.  BRYAN.  Mr.  Chairman.  I  submit  here,  in  conclusion 
on  this  branch  of  the  subject,  what  Mr.  Carlisle  said  in  1878: 

According  to  my  view  of  the  subject,  the  conspiracy  which  seems  to  have 
been  formed  here  and  in  Europe  to  desti'oy  by  legislation  or  otherwise  from 
one-third  to  one-half  of  the  metallic  money  of  the  world  is  the  most  gigantic 
crime  of  this  or  any  other  age. 

I  only  read  that  to  show  that,  in  the  opinion  of  Mr.  Carlisle,  a 
conspiracy  was  once  formed  in  this  (Country  and  in  Europe  together 
to  destroy  one-half  of  the  metallic  money  of  the  world:  and  if  the 
financiers  of  the  whole  world  can  get  together,  how  much  easier 
it  is  going  to  be  for  the  financiers  of  a  community  or  a  locality  or 
of  a  State,  or  even  of  the  LTnited  States. 

But  now  let  me  take  up  anotlier  point.  These  notes  are  objec- 
tionable because  the.y  are  not  legal-tender  notes.  There  is  no  sort 
of  ijretense  that  any  legal-tender  qualitj'  can  be  given  to  the  notes 
to  be  issued  under  this  law,  whether  they  be  issued  by  national 
banks  or  by  State  banks.  Mr.  Chairman,  I.  for  one,  am  opposed 
to  any  money  being  in  circulation  which  is  not  a  legal  tender  for 
1779 


24 

debts.  Yoii  can  not  make  these  bank  notes  a  legal  tender — at 
least  it  has  uever  been  attempted — even  though  they  are  the  notes 
of  national  ])anks:  nor  can  StHte-l)ank  notes  be  made  a  legal  tender. 

The  resnlt  will  be  that  when  yon  have  driven  out  the  green- 
backs and  the  Treasury  not.es  and  substituted  these  bank  notes 
for  them  the  people  will  be  using  a  money  which  will  pay  debts 
only  by  ••  unanimoiis  consent."'  it  will  be  the  opportunity  of  the 
shsPver.  Tiie  extremity  of  the  individual  will  become  the  oppor- 
timity  of  the  man  who  desires  to  profit  by  his  misfortunes.  Gen- 
tlemen refer  to  the  Bank  of  England  notes;  they  are  a  legal  ten- 
der. Gentlemen  refer  to  the  notes  of  the  Bank  of  France:  they 
are  a  legal  tender.  So  far  as  I  know,  there  is  no  money  in  circu- 
lation in  France  that  is  not  a  legal  tender.  So  far  as  I  know, 
there  is  no  money  in  circulation  in  England  (except,  of  course, 
the  subsidiary  coins),  which  is  not  a  legal  tender. 

Mr.  WILLIAMS  of  Mis.sissippi.  The  notes  of  the  .-joint-stock 
banks  of  England  and  the  notes  of  the  Scottish  banks  circulate 
freely  in  Great  Britain,  yet  they  are  not  legal  tender. 

Ml'.  WARNER.    And'  the  notes  of  the  Irish  banks  also. 

Mr.  BRYAN.  I  had  reference  to  the  notes  of  the  banks  in  Eng- 
land, but  if  necessary  I  ■nail  modify  my  statement  to  conform  to 
the  suggestions  made. 

Mr.  KILGORE.  Is  it  not  a  fact  that  our  national-bank-note 
currency,  which  passes  just  as  current  as  the  greenback,  is  not  a 
legal  tender? 

Mr.  BRYAN.    Yes,  sir. 

Mr.  KILGORE.  Is  it  not  a  fact  that  the  greenback  currency 
at  one  time  in  its  history  depreciated  200  or  300  per  cent,  while 
at  the  same  time  it  was  a  legal  tender,  was  nontaxable,  and  was 
fundable  in  a  bond  bearing  a  high  rate  of  interest? 

Mr.  BRYAN.    Yes.  sir;  it  was  a  partial  legal  tender. 

Mr.  KILGORE.  Then  the  legal-tender  quality  does  not  keep 
up  a  currency? 

Mr.  BRYAN.     I  was  not  discussing  that  question. 

Mr.  KILGORE.  Well,  the  legal-tender  quality  is  not  essential 
to  the  circulation  of  a  currency? 

Mr.  BRYAN.  On  that  subject,  Mr.  Chairman,  I  would  like  to 
say  that,  in  my  judgment,  the  reason  why  the  greenback  fell  below 
par  was  that  it  contained  an  exception  clause  and  because  the 
Government  itself  refused  to  take  it.  By  compelling  the  payment 
of  Government  dues  in  coin  a  demand  for  coin  was  created  and  that 
demand  raised  the  coin  to  a  premium.  The  greenback,  however, 
was  always  as  good  as  the  national-bank  notes.  The  national- 
bank  note  that  we  now  have,  while  it  is  not  a  legal  tender,  is 
only  a  small  part  of  our  currency.  The  bank  notes  now  out- 
standing amount  to  only  two  hundred  millions,  while  we  have 
about  five  hundred  millicms  of  legal-tender  i)aper,  and  now  it  is 
proposed  to  take  away  all  our  legal-tender  paper  and  give  us  pajier 
money  that  is  not  a  legal  tender.  More  than  that,  the  bank  notes 
that  we  now  have  are  guaranteed  by  the  Government,  and  ordi- 
narily a  bank  will  give  you  money  upon  them,  because  there  can 
not  be  any  possibility  of  loss.  But  the  bank  notes  provided  for  in 
this  bill  are  not  the  same  kind  of  bank  notes  as  those  we  now 
have.  If  these  notes  are  good,  why  not  compel  the  banks  them- 
selA'es  to  redeem  the  notes  of  other  banks?  You  are  trjdng  to 
foist  upon  the  public,  notes  which  the  banks  themselves  discredit 
1779 


25 

by  refusing  to  redeem  them,  and  yet  you  tell  the  people  that  they 
are  good  notes  and  that  they,  ought  to  accept  them. 

Mr.  WARNER.  I  desu-e  to  ask  the  gentleman  whether  he  is 
under  the  impression  that  the  pending  bill  repeals  that  clause  of 
the  existing  law  which  makes  the  notes  of  national  banks  accept- 
able bv  all  other  national  banks  in  paynrent  of  debts  due  them? 

Mr.  BRYAN.     I  think  it  does  not. 

Mr.  WARNER.  I  am  sorry  that  it  does  not,  but  in  fact  it  does 
not. 

Mr.  BRYAN.  What  I  say  is  this,  that  now,  because  the  na- 
tional-bank notes  are  necessarily  good,  being  backed  by  a  Gov- 
ernment bond,  a  bank  will  always  give  you  coin  or  anything  else 
you  want  for  them.  It  is  not  compelled  to  do  so  by  law.  It  is  com- 
pelled to  redeem  its  own  notes,  but  not  the  notes  of  other  banks. 
Ordinarily,  however,  a  bank  will  give  you  coin  for  notes  of  an- 
other national  bank.  But  when  you  change  the  character  of  the 
note  and  make  a  note  which  the  banks  may  not  be  willing  to  re- 
deem, you  do  not  know  whether  you  are  going  to  have  any  incon- 
venience or  not.  Gentlemen  will  remember  that  during  the  panic 
a  year  ago  the  banks  refused  to  take  drafts  drawn  on  each  other, 
except  for  collection.  And,  as  to  this  Canadian  currency  which 
we  have  heard  so  much  about,  I  find  in  a  pamphlet  issued  by  the 
Reform  Club — which,  having  reformed  the  tariff,  is  now  about  to 
reform  the  currency  (laughter) 

Mr.  BOEN.     Where  is  that  Reform  Club  located? 

Mr.  BRYAN.     In  New  York. 

Mr.  LACEY.  Is  it  going  to  make  as  good  a  job  of  the  currency 
as  it  did  of  the  tariff?     [Laughter] . 

Mr.  BRYAN.  Well,  I  was  partially  satisfied  with  its  woi'k  on 
the  tariff,  more  so  than  I  am  with  its  proposed  work  on  the  cur- 
rency. But  1  desire  to  read  an  extract  from  the  pamphlet  on  this 
point: 

Therstofore  the  notes  of  each  Ijank  had  been  accepted  without  hesitation 
by  all  other  banks,  but  the  universal  laws  of  exchange  prescribed  that  in  cer- 
tain cases  such  notes  should  be  only  accepted  at  a  discount.  For  example, 
the  movement  of  funds  being  in  general  from  the  Maritime  Provinces  toward 
Ontario  and  Quebec,  the  notes  of  the  Nova  Scotia  and  New  Brunswick  banks 
generally  were  at  a  slight  discount  in  Toronto  and  Montreal,  as  drafts  upon 
those  banks  would  naturally  be.  Likewise  the  notes  of  Toronto  and  Mont- 
real banks  were  usually  subject  to  some  discount  in  the  Northwest  Prov- 
inces. 

Now,  the  Government  came  in  and  established  central  redemp- 
tion agencies;  the  banks  did  not  establish  them.  The  Govern- 
ment hy  law  compelled  the  establishment  of  these  agencies. 

Now  this  bill,  as  first  introduced,  provided  that  the  banks  should 
establish  agencies  where  they  desired.  In  its  amended  form  the 
bill  is  improved,  because  it  requires  the  designation  of  those  agen- 
cies by  the  Government.  When  the  bill  was  first  reported  the 
committee  had  confidence  that  the  banks  would,  of  their  own 
accord,  establish  a  sufficient  number  of  agencies.  Yet  in  Canada, 
where  the  banks  had  the  same  power,  their  notes  were  at  a  dis- 
count at  distant  points.  But  if  you  establish  the  agencies  you 
can  not  have  them  in  every  town.  For  instance,  if  there  is  an 
K*g'ency  at  Omaha  or  Lincoln  a  man  two  or  three  hundred  miles 
distant  who  holds  a  note  has  no  assurance  that  he  may  not  have  to 
pay  a  discount  on  that  note  in  order  to  get  it  cashed.  So  that, 
Mr.  Speaker,  you  simply  leave  the  note  holder  at  the  mercy  of  the 
man  who  is  furnishing  the  money  which  he  must  have. 
1:79 


26 

Mr.  WARNER.  As  I  understand  the  gentleman,  he  is  fully 
aware,  as  1  was  afraid  he  was  not,  that  the  bill  now  pending-  pro- 
vides additional  facilities  for  redemption,  to  be  prescribed  by  the 
Comiitroller  of  the  Currency.  Now,  do  I  understand  him  for  one 
moment  to  siigsfst  that  with  a  law  in  force,  which  it  is  not  pro- 
posed to  change,  compelling  every  natit)nal  bank  throughout  the 
length  and  breadth  of  this  country  to  receive  this  ciirrency  as  legal 
tender  in  payment  of  any  obligation  to  it  either  from  another  bank 
or  from  an  individual,  one  dollar  of  this  currency  can  for  a  mo- 
ment go  below  par.  unless  the  whole  system  should  go  to  smash? 

Mr.  BRYAN.  Mr.  Chairman,  1  take  it  for  granted  that  a  l)ank 
will  comjily  with  the  law.  and  I  take  it  for  granted  that  it  will  do 
no  more  than  comply  with  the  law  unless  it  wants  to  do  so.  And 
we  can  not  take  our  experience  under  the  present  law  and  j  udge  from 
it  what  will  be  the  experience  under  the  new  law.  While  under  a 
continuation  of  the  law  now  existing  a  bank  will  be  compelled 
to  receive  this  note  for  debts  due  it  from  individuals  or  banks, 
yet  if  a  man  wants  to  get  money  on  the  note  he  can  not  take 
it  to  another  bank  and  obtain  the  money:  the  bank  may  simply 
take  it  for  collection  and  charge  him  a  discount. 

Mr.  WARNER.  Does  the  gentleman  mean  that,  with  the  great 
volume  of  our  currency  c(jntinually  passing  through  the  banks  in 
payment  of  loans  that  they  have  made,  a  note  receivable  by  any 
baiik  in  the  United  States  in  payment  of  any  obligation  due  it, 
can  remain  for  one  moment  in  any  other  part  of  the  United  States 
at  a  discount? 

Mr.  BRYAN.    Yes,  sir. 

Mr.  WARNER.    Well,  the  gentleman  is  welcome  to  his  opinion. 

Mr.  BRYAN.  In  my  judgment  that  is  possible,  and  not  only 
possible  but  probable,  and  I  think  it  constitutes  one  of  the  dan- 
gei-s  of  this  kind  of  currency.  When  you  have  -sxithdrawn  the 
greenbacks  and  Treasury  notes  you  have  not  a  dollar  that  you  can 
pay  a  debt  with.  Paper  nuiney  is  all  that  circulates.  People  do 
not  want  gold  and  silver  to  carry  around  in  their  pockets.  They 
want  the  pa]>er  representatives  of  gold  and  silver.  And  yet  you 
want  to  flood  the  country  with  a  papT:>r  currency  that  you  can  not 
pay  a  debt  with  and  can  not  di-aw  money  on  unless  you  X)resent 
the  paper  at  the  bank  which  issued  it  or  at  a  redemption  agency. 

Now.  let  me  call  your  attentifm,  Mr.  Chairman,  to  the  testimonj- 
of  Mr.  Butler,  and  I  was  interested  in  it  because  it  perhaps  gives 
the  origin  of  one  of  the  popular  songs  of  the  jjresent  day. 

One  of  the  great  arguments  in  favor  of  a  l)ank  currency  is  that 
it  is  an  elastic  currencj^  and  they  tell  us  it  can.  only  be  elastic  by 
bei7ig  a  nonlegal-tender  currency  and  not  redeemable  at  all  the 
banks,  so  that  it  will  always  return  to  the  bank  issuing  it  when 
there  is  a  surphis.  That  is  the  argument  in  favor  of  an  elastic 
currency — that  it  is  not  a  legal-tender  currency;  that  when  there 
is  no  use  for  it  it  Avill  always  tend  to  come  back  to  the  bank  of 
issue.  And  in  the  old  wild-cat  currency  days  the  banks  used  to 
send  their  currency  off  as  far  as  they  could,  so  that  it  would  be  as 
long  as  possible  in  getting  back.     Mr.  Biitler  says: 

Under  every  effort  we  made  to  keep  it  oiit  it  remained  about  $135,000;  and 
even  then  weused  to  send  it  to  (Miio  and  Illinois  and  Indiana. 

But  no  matter  how  far  it  was  sent  awa3-,or  how  often,  this  wild- 
cat currency  would  always  come  back  at  last,  and  I  think  that  may 
be  the  origin  of  the  song,  "And  the  cat  came  back."     [Laughter.] 
1779 


27 

Now,  that  is  the  idea  of  some  of  our  financiers  as  to  this  money. 
I  do  not  believe  we  can  afford  to  substitute  for  legal- tender  money 
a  money  which  is  not  legal  tender.  There  is  nobody  demanding 
it.  The  people  who  use  the  money  are  not  demanding  it.  No 
party  is  demanding  it.  No  association  is  demanding  it,  except  the 
people  who  want  to  issue  the  money.     They  are  the  only  ones. 

Mr.  BLACK  of  Georgia.  Let  me  ask  the  gentleman  if  there  was 
not  something  of  a.  pledge  or  a  demand  for  it  in  the  Democratic 
platform  on  which  the  gentleman  was  nominated? 

Mr.  BRYAN.  There  was  not.  There  was  a  demand  in  the  na- 
tional ijlatf orm  that  we  take  off  the  tax  on  State-bank  circula- 
tion. 

Mr.  BLACK  of  Georgia.  Will  the  gentleman  question  the  fact 
that  the  purpose  was  to  allow  the  State  banks  to  be  restored  to  the 
rights  they  enjoyed  before  that  tax  was  imposed? 

Mr.  BRYAN.  That  was  the  intention,  I  think,  of  those  who 
secured  the  adoption  of  that  plank;  but  I  heard  some  very  eloquent 
men  on  this  floor  say  that  the  reason  was  because  it  was  an  uncon- 
stitiitional  tax. 

Mr.  BLACK  of  Georgia.  Of  course  unconstitutional.  But  the 
gentleman  started  out  in  his  address  that  has  been  so  entertaining 
and  instructive  to  us,  and  I  quite  agree  with  very  much  that  he 
has  said,  with  the  opening  declaration  of  the  obligation  of  plat- 
forms. Now,  I  wanted  to  knoM'  what  he  was  going  to  do  about 
that  demand  of  the  Democratic  party  in  its  platforni. 

Mr.  BRYAN.  I  think  the  gentleman  is  rather  straining  niy  lan- 
guage. I  said  the  object  of  platforms  was  to  x>ut  questions  before 
the  people  so  they  could  choose  their  servants  on  them,  and  I  made 
the  point  that  this  currency  scheme  had  never  been  under  public 
discussion.  The  platform  did  not  demand  the  retirement  of  green- 
backs and  Treasury  notes. 

Mr.  WILLIAMS  of  Mississippi.  So  you  do  not  stand  on  the 
Democratic  platform? 

Mr.  BRYAN.  So  far  as  that  plank  is  concerned,  many  men, 
elected  as  Democrats,  repudiated  that  plank  entirely.  I  was  one 
of  those  who  voted  against  taking  off  the  tax  before  and  after  the 
election,  and  I  expect  to  continue  to  occupy  that  position. 

Mr.  BLACK  of  Georgia.  Then  the  gentleman  is  boimd  by  the 
platform  when  he  chooses  to  be  bound  by  it,  but  not  otherwise? 

Mr.  BRYAN.  I  can  not  see  how  the  gentleman  can  put  that 
constriiction  upon  what  I  have  said.  I  think  when  a  man  repu- 
diates a  plank  in  advance  of  election  he  is  not  bound  by  it.  That 
is  often  done.  So  far  as  I  am  concerned,  however,  I  denounced 
that  plank  during  the  campaign,  and,  besides,  I  was  nominated  be- 
f oi'e  the  i)latf orm  was  adopted  and  on  a  platform  which  differed 
in  some  respects  from  the  national  platform.  I  consider  myself 
bound  by  tlie  platform  on  which  I  was  nominated  and  elected 
rather  than  by  the  national  platform. 

But  I  must  not  dwell  on  that.  I  do  not  believe,  Mr.  Chairman, 
that  the  notes  will  be  safe  under  this  proposed  plan.  I  do  not  want 
to  present  too  long  a  list  of  objections  to  the  notes,  but  I  do  not  be- 
lieve that  they  are  safe,  and  let  me  give  you  one  of  the  strongest 
evidences  that  they  are  not  safe.  You  know  why  the  substitute 
took  away  the  dangei;  of  assessment?  It  was  because  the  banks 
were  afraid  of  the  liability  under  it.  Now,  if  the  notes  are  good 
without  that,  the  banlw  were  in  no  danger.  If  the  banks  Avere  in 
1779 


28 

tl;ni,t>er  hecaiise  of  that,  then  the  notes  are  not  good  without  it. 
Ami  if  the  clanger  of  being  called  upon  to  make  good  the  losses 
was  so  gi-eat  that  banks  would  refuse  to  go  into  the  business  be- 
cause of  it.  I  want  to  ask  if  the  danger  is  not  great  enough  to  make 
the  holders  of  the  notes  fearful  if  the  assessment  is  done  away 
with? 

Tliere  is  no  absohite  security  for  paper  money  unless  the  Gov- 
ernment is  back  of  it.  If  we  are  going  to  liave  paper  money  I  be- 
lieve the  first  essential  is  that  it  shall  be  absolutely  good.  If  we 
are  going  to  have  bank  money  I  believe  the  best  bank  money  we 
ever  had  is  the  present  national-bjink  money,  becaiise  it  is  always 
good  in  the  handset  the  note  liolders.  But  the  national  bank  has 
objectionable  features — all  the  objectionable  features,  in  fact,  that 
banks  of  issue  have  on  princi])le.  Still  it  furnishes  security  for 
its  notes,  and  this  biU  now  pending  does  not  give  security  to  the 
notes.  Yoii  may  say  that  generally  they  will  be  good.  That  is 
true.  Ordinarily  they  Mall  be  good,  but  you  can  not  make  them 
good  enougli  to  meet  emergencies. 

Let  me  call  your  attention  to  the  experience  had  in  Newfound- 
land quite  recently.  They  had  two  large  banks  of  issue  there 
which  had  $1,200,000  of  currency  outstanding.  These  banks  re- 
cently suspended  payment.  They  were  g0(  )d  banks.  Things  went 
on  smoothly  in  prosperous  times.  One  declared  a  13  per  cent  div- 
idend last  year  and  the  other  a  15  per  cent  dividend.  In  time  of 
prosperity  they  prospered;  but  wliat  was  the  result  when  ad- 
ver.sity  came?  Why,  the  banks  sus]:)ended  payment,  the  notes 
became  mere  merchandise,  and  I  have  just  noticed  in  the  press 
dispatches  that  a  government  leader  has  oifered  a  bill  providing 
that  the  Grovernment  shall  investigate  the  matter,  find  out  how 
much  the  banks  anhII  pay,  and  then  guarantee  the  notes  to  that 
extent  so  that  they  ^\^ll  again  pass  as  money,  the  concluding  words 
of  tlie  paragraph  being  that  some  are  advocating  a  plan  which 
provides  for  issuing  treasury  notes. 

Ah,  Mr.  Chairman,  when  we  come  to  the  time  of  need  private 
banks  of  issue  are  a  failure,  and  the  people,  after  all,  must  fall 
ba-ck  upon  the  Government.  If  the  Government  is  good  enough 
to  give  relief  in  time  of  distress,  whj-  is  it  not  good  enougli  to  fur- 
nish in  times  of  prosperity  the  notes  required  to  meet  the  needs 
of  business?  Why  is  the  greenback,  which  is  so  good  whenever 
there  is  an  extremity,  so  repugnant  to  every  idea  of  "good  bank- 
ing ■■  when  the  time  comes  that  the  banker  can  take  something  else 
and  make  more  money  out  of  it? 

The  State-bank  circulation  contemplated  is  not  as  safe  even  as 
the  national-bank  notes  proposed.  The  bill  allows  the  revival  of 
State  banks  of  issiie  under  certain  conditions,  but  it  does  not  pro- 
vide for  any  safety  fund.  It  pro\'ides  the  guaranty  fund,  but  not 
the  safety  fund.  You  have  simply  the  assets  of  the  bank.  You 
say,  -'If  men  do  not  want  to  take  the  money  they  need  not  do  so." 
That,  Mr.  Chairman,  is  not  a  sufficient  answer.  We  have  a  law 
that  requires  the  inspection  of  baiaks  by  Government  agents. 
Why  do  you  not  say  that  if  men  do  not  want  to  deposit  in  banks 
they  need  not  do  it.  We  know,  Mr.  Chairman,  that  we  must  in- 
spect and  regulate  them,  because  otherwise  the  people  will  be  im- 
posed upon  and  advantage  be  taken  of  their  necessities.  And  the 
same  argument  that  justifies  a  law  regulating  the  rate  of  interest, 
the  same  argument  that  is  behind  a  law  inspecting  banks  and 
1779 


29 

inspecting  scales,  etc.,  is  the  argument  that  will  compel  yon  to 
make  paper  money  good  before  yon  allow  it  to  circulate.  You 
do  not  do  it  with  state  banks. 

I  appreciate  the  contention  of  these  gentlemen  who  say  that  the 
States  ought  to  be  allowed  to  regulate  that  themselves.  But.  Mr. 
Chairman,  this  money  is  a  matter  which  aftects  the  whole  country. 
It  is  a  matter  which  affects  one  State  as  much  as  another.  The  law 
now  virtiTally  prohibits,  not  in  terms,  but  in  effect.  State  banks 
from  issuing  circulation;  and  I  prefer  to  let  it  stay  as  it  is,  rather 
than  repeal  the  law  and  risk  the  reestablishment  of  wild-cat  banks. 

It  is  not  that  every  bank  would  be  a  wild-cat  bank.  It  may  be 
the  majority  of  them  would  be  good,  but  Mr.  Chairman,  the  fact 
that  some  of  them  are  bad  will  throw  discredit  upon  all  the  rest 
of  them,  and  people  will  be  first  negotiating  the  price  of  a  horse, 
and  then  the  price  of  the  money  that  pays  for  the  horse. 

But  I  must  not  dwell  upon  that.  I  believe  that  this  bill  lessens 
the  security  to  depositors.  G-entlemen  talk  about  the  banks  keep- 
ing a  reserve  without  any  compulsion.  They  probably  would. 
Good  banks  would,  and  you  say  bad  banks  will  evade  it  anyhow. 
Well,  men  try  to  evade  all  good  laws;  but,  Mr.  Chairman,  I  do 
not  think  this  provision  which  repeals  the  necessity  for  a  reserve 
fund  is  in  the  interest  of  the  depositors,  or  in  the  interest  of  the 
public.  Just  as  soon  as  there  is  a  threatened  panic,  the  fact  that 
there  is  no  legal  reserve  required  will  make  people  suspicious,  and 
will  hasten  the  run  upon  that  bank. 

Mr.  PENCE.     Will  the  gentleman  permit  me? 

Mr.  BRYAN.     Yes,  sir. 

Mr.  PENCE.  Is  it  your  understanding  that  this  bill  repeals 
the  provision  of  the  national  banking  act  requiring  a  reserve? 

Mr.  BRYAN.     Yes;  this  bill  does  it  in  so  many  words. 

Mr.  PENCE.     You  are  speaking  of  the  substitute? 

Mr.  BRYAN.     Both  of  them  do. 

Mr.  WARNER.  What  protection  is  a  reserve  to  depositors  in 
case  of  a  run,  or  in  case  of  close  times? 

Mr.  BRYAN.  Itis  just  this  protection.  People  differ  in  timidity. 
The  very  timid  will  go  first.  If  they  get  their  money,  that  tends 
to  allay  the  panic,  and  if  there  is  no  legal  reserve  there  they  are 
more  apt  to  start  a  run  in  the  first  place,  and  if,  when  they  get 
there  they  find  the  money  gone,  then  the  bank  has  to  suspend. 

Mr.  WARNER.  I  understand  that  the  gentleman  admits  that 
in  times  when  money  was  not  tight  there  was  no  trouble.  Now 
what  I  am  getting  at  is,  how  does  the  proviso  for  a  reserve  afford 
any  additional  security  whatever  for  depositors  in  the  time  of  a 
run?  Is  not  the  reserve  comparatively  small  and  paid  out  to  those 
who  first  get  there? 

Mr.  BRYAN.     Certainly. 

Mr.  WARNER.  Then,  how  is  it  any  protection  to  a  depositor 
in  the  case  of  a  run? 

Mr.  BRYAN.  It  is  a  great  protection  to  have  some  money  there 
to  be  paid  to  the  first  who  come,  and  stop  the  panic,  rather  than 
to  have  none  there  when  they  come  for  it.  It  gives  a  feeling  of 
confidence  which  is  very  important. 

Mr.  WARNER.  Does  it  give  a  feeling  of  confidence  to  have  it 
understood  that  the  bank  is  encroaching  upon  its  legal  reserve? 

Mr.  BRYaN.     It  can  only  encroach  upon  its  reserve  to  pay  its 
depositors,  but  without  a  law  on  the  subject  it  can  encroach  upon 
1779 


3(» 

its  reserve  to  make  loans,  and  if  the  desire  to  loan  monej'  and  get 
intorcst  for  it  is  ji^reater  than  the  caution  of  the  officers  of  the  bank 
the  dfpKsitors  suffer. 

Mr.  WARNER.  Do  I  understand,  then,  that  a  bank  can  stop 
a  run,  or  can  do  anything  else  than  cause  a  run.  by  refusing  to 
extend  its  loans,  and  thereby  compelling  the  people  to  get  the  cur- 
rency? I  appreciate  the  gentleman's  argument  as  to  general  times, 
but  i  ask  liiui  in  all  candor  whether  every  argument  for  a  reserve 
in  ordinary  times  does  not  fail  in  times  of  panic,  and  whether  the 
fact  of  a  reserve  is  any  protection  or  unj^thing  else  than  a  prohibi- 
tion to  the  bunk  from  extending  loans  so  as  to  prevent  tinaucial 
stress  and  rxms  upon  the  bank? 

Mr.  BRYAN.  Well,  Mr.  Chairman,  I  have  no  idea  that  I  will 
ever  be  able  to  entirely  agree  ^\'ith  the  gentleman  in  opinion:  but 
my  point  is  this,  that  if  a  l)ank  is  permitted  to  loan  all  its  ca))ital 
and  not  required  to  keep  any  reserve,  then  as  soon  as  a  imnic  is 
started  the  bank  will  have  to  draw  in  its  loans  and  embarrass  its 
borrowers  or  find  its  vaults  empty. 

Mr.  WARNER.  Will  it  rn^t  have  to  withdraw  those  loans  if  it 
is  not  allowed  to  discount  while  its  reserve  is  not  kept  up? 

Mr.  BRYAN.     No,  sir.     It  will  have  to  refuse  loans. 

Mr.  WARNER.  If  there  should  be  a  run  on  the  bank,  and  it 
should  withdraw  its  loans,  will  it  not  make  a  greater  rush  for  the 
currency. 

■Mr.  BRYAN.  No,  sir.  The  run  would  not  be  as  great  as  it 
would  be  without  a  reserve. 

Mr.  WARNER  That  is  the  way  it  looks  in  our  part  of  the 
country. 

Mr.  BRYAN.  If  its  legal  reserve  is  safe  it  can  renew  its  loans 
and  the  gentleman  can  see  how  much  more  danger  there  is  of  the 
panic  being  extended  if  the  bank  must  draw  in  its  loans  and 
create  a  reserve  after  the  ])anic  begins. 

Mr.  WARNER.  But  if  you  refuse  to  extend  loans,  does  not 
that  cause  a  greater  demand  for  currency?   • 

Mr.  BRYAN.  If  j-ou  have  to  refuse  extension  in  order  to  create 
a  reserve  you  will  cause  embarrassment,  but  if  you  have  the  legal 
reserve  on  hand  you  can  extend  loans. 

Mr.  WARNER.  The  gentleman's  understanding  of  the  law  is 
entirely  different  from  that  which  we  have  in  our  part  of  the 
country.  The  understanding  we  have  of  the  present  law  is  that 
it  forbids  the  extension  of  loans  and  discounts  which  might  keep 
money  easy  and  save  the  cash  reserve  from  being  drawn  out  by 
depositors  in  a  run. 

Mr.  BRYAN.  Why,  certainly,  if  the  reserve  falls  below  the 
limit. 

Mr.  WARNER.  In  other  words,  whenever  there  comes  a  time 
when  the  demand  for  ni(  mey  is  such  as  to  Tiring  it  down  to  the 
reserve  line,  the  proviso  for  a  reserve  prevents  the  bank  from  ex- 
tending loans  and  thereby  protecting  itself  from  the  run  upon  its 
currency. 

Mr.  BRYAN.  I  have  tried  to  state  my  position  clearly  and 
have  given  the  reastnis  which  lead  me  to  believe  that  -without  a 
legal  reserve  depositors  are  less  secure  and  panics  more  jsrobable. 

And  now.  let  me  add.  that  the  security  of  the  depositors  is  still 
further  lessened  by  this  bill,  because  the  payment  of  the  circu 
lating  notes  is  made  a  first  lien  upon  all  the  a.ssets  of  the  bank. 
1779 


31 

Under  the  present  law  the  bonds  are  always  more  than  sufficient 
to  redeem  the  bank  notes  outstanding,  but  imder  the  new  law,  if 
an  officer  of  the  bank  runs  away  with  the  funds  on  hand,  an 
amount  of  notes  equal  to  more  than  one-half  of  the  capital  must 
be  i-edeemed  out  of  the  assets  which  ought  to  secure  the  deposi- 
tors. The  danger  to  depositors  occasioned  by  this  new  liability 
will  intensify  financial  disturbances  and  invite  general  panic. 

But  why  particiilarize  further'?  There  is  hardly  a  dangerous 
financial  idea  now  extant  which  has  not  found  a  place  in  the  bill, 
and  there  are  several  days  left  in  which  to  supply  newly  discovered 
ones  by  amendment.  The  presentation  of  the  bill  at  this  time  is 
not  only  inopportune,  but  is  absoliitely  without  excuse.  The 
measure  is  half  national  bank  and  half  State  bank,  the  deformed 
offspring  of  two  false  systems,  and  has  all  the  faults,  weaknesses 
and  frailties  that  might  be  expected  in  the  child  of  such  a  union. 

I  said  that  it  was  without  excuse.  I  will  modify  the  statement. 
It  is  without  an  excuse  which  can  be  boldly  declared.  There  is 
an  excuse  for  it.  but  the  excuse  does  not  appear  in  the  argument 
of  those  who  advocate  the  bill.  There  is  a  purpose  behind  it, 
but  it  is  not  the  jmrpose  blazoned  upon  the  banners.  The  real 
piiri)Ose  of  the  bill  is  to  take  another  and  a  long  step  in  the  direc- 
tion of  gold  monometallism. 

When  we  were  considering  the  repeal  of  the  Sherman  law  some 
of  the  members  who  voted  for  that  bill  did  not  like  it,  but  they 
made  themselves  believe  that  it  would  help  silver:  that  it  would 
"clear  away  the  rubbish,"  as  some  said,  and  that  we  would  "get 
down  to  the  foitndaticm,"  and  on  that  we  would  build  up  bimet- 
allism. There  were  men  in  this  House  who  voted  for  the  repeal 
of  the  Sherman  law  under  the  belief  that  there  would  be  subse- 
quent affirmative  legislation  in  favor  of  silver.  Some  of  us  tried 
to  convince  those  members  that  the  infl^^ences  behind  that  bill 
were  hostile  to  the  reestablishment  of  silver.  There  was  never 
anything  in  the  President's  attitude  to  encourage  any  man  to  be- 
lieve that  he  intended  to  do  anything  toward  the  rehabilitation 
of  silver,  but  there  were  some  people  who  voted  for  that  bill 
in  the  vague  hope  that  in  some  way  it  would  turn  out  to  the 
advantage  of  silver;  and  to-day  there  are  men  who  are  going  to 
vote  for  this  bill  who  are  trying  to  justify  their  action  on  the 
ground  that  in  some  way  this  bill  will  redound  to  the  benefit  of 
silver. 

I  desire  to  call  the  attention  of  any  such  to  a  statement  made  in 
the  New  York  Evening  Post  of  December  19,  this  week: 

Whatever  may  be  the  fate  of  the  Carlisle  bill,  the  movement  for  currency 
reform  through  better  banking  methods  will  go  on,  and  it  will  draw  more 
and  more  of  Mr.  Bland's  cohorts.  Already  the  newspapers  of  the  mining 
States  have  taken  the  alarm.  Some  of  them  say  that  either  the  Carlisle  bill 
or  the  Baltimore  plan,  if  adopted,  will  be  the  '•death  knell  of  silver."  Yes, 
gentlemen,  the  death  knell  of  silver,  in  the  sense  that  you  mean,  is  already 
sounded.  It  was  sounded  when  th3  attention  of  the  public  was  drawn  to  a 
cheaper  and  speedier  way  of  supplying  the  public  with  the  instruments  of 
exchange  needed  to  transact  their  daily  business 

Mr.  Chairman,  it  is  my  humble  judgment  that  the  influences 
behind  this  bill  are  bent  on  nothing  less  than  the  total  arniihila- 
tion  of  silver  as  standard  money.  Notwithstanding  the  distress 
and  misery  already  brought  upon  our  people  by  the  appreciation  of 
money:  notwithstanding  the  declaration  of  all  national  platforms 
in  favor  of  bimetallism;  notwithstanding  the  known  sentiment  of 
1779 


32 

the  pec^ple  in  favor  of  the  use  of  both  gold  and  silver  as  standard 
moiK'v;  not\\ithst;inding  the  constant  contest  waged  by  the  agri- 
cnltnral  comninnities  in  favor  of  the  rehabilitation  of  the  white 
nu'tal:  notwithstanding  the  recent  resolutions  of  the  Federation 
of  Labor  in  favor  of  the  immediate  restoration  of  the  free  and 
nnliinited  coinage  of  gold  an<l  silver  at  the  present  ratio  of  1(5  to  1 
without  waiting  for  the  aid  or  consent  of  any  other  nation  on 
earth — notwithstanding  all  these  influences,  I  say,  in  favor  of  bi- 
metallism, the  money  centers  i>resent  this  insolent  demand  for 
further  legislation  in  favor  of  an  universal  gold  standard.  I.  for 
one.  will  not  yield  to  the  demand.  I  will  not  help  to  crucify 
mankind  upon  a  cross  of  gold.  1  will  not  aid  them  to  press  down 
upon  the  bleeding  brow  of  lal)or  this  crown  of  thorns. 

The  menil)er  who  votes  for  this  Ijill  may  justify  his  vote  in  his 
o^^^l  mind  and  indiilge  the  hope  that  in  some  way  it  will  turn  out 
for  the  benefit  of  silver,  but  I  warn  him  that  when  this  bill  is  dis- 
posed of  the  forces  which  are  pushing  it  through  Congress  will  never 
allow  any  legislation  favorable  to  bimetallism  if  they  can  prevent 
it.  It  is  a  part  of  the  gold  conspiracy,  and  like  every  other  act  in 
the  conspiracy  comes  to  us  in  disguise.  The  demonetization  of 
silver  in  1878  was  not  secured  after  open  discussion.  The  law  was 
not  enacted  after  the  people  had  passed  upon  the  question.  De- 
monetization was  secured  then  without  popular  consent,  and  was 
hidden  in  a  bill  to  codify  the  mint  laws.  Again,  what  about  the 
bill  of  last  summer?  Had  the  people  gone  into  the  campaign  and 
demanded  the  unconditional  repeal  of  the  Sherman  law?  No, 
sir.  The  same  x)lank  of  the  platform  which  declared  for  the  re- 
lieal  of  that  law  declared  for  the  coinage  of  gold  and  silver  on 
equal  terms  "nathout  charge  for  mintage,  and  you  Southern  mem- 
bers, most  of  you  at  least,  took  that  ptank  in  the  platform  before 
your  constituents  and  told  them  that  it  meant  the  restoration  of 
silver.  And  yet.  after  a  national  victory  had  been  won  on  that 
platform  vrhich  declared  for  the  equal  treatment  of  both  metals, 
we  assembled  here  and  were  told  that  we  must  first  repeal  the 
Slierman  law  and  that  then  we  could  carrj^  out  the  other  part 
afterwards. 

One-half  of  the  work  was  done,  but  where  is  the  other  half? 
I  insisted  at  the  time  that  it  was  not  the  purpose  of  those  who  were 
behind  that  rei)eal  bill  to  restore  silver.  I,  for  one,  have  not  been 
deceived  by  the  events  which  have  followed.  But  those  members 
of  this  Congress  who  voted  for  the  repeal  of  the  Sherman  law  in 
the  Ijelief  that  it  was  going  to  bring  the  restoration  of  silver, 
what  have  they  seen  to  justify  their  hopes?  The  gentleman  from 
New  York  [Mr.  Hendrix]  stood  on  this  floor  and  told  us  that  if 
Congress  would  pass  that  repeal  bill  '-within  three  months" 
England  would  be  here  asking  for  an  international  agreement. 
The  bill  was  passed.  Three  months  passed,  and  England  did  not 
come.  Three  more  months  passed,  and  England  did  not  come. 
Nine  months — more  than  a  year  has  passed  away,  and  yet  England 
has  not  asked  us  for  an  international  agreement. 

A  year  has  passed  away,  and  yet  the  President  of  the  United 
States  has  not  proposed  a  single  plan  for  the  rehabilitation  of  sil- 
ver. A  year  has  passed  away,  and  the  President  has  never  inti- 
mated a  desire  or  a  purpose  to  help  in  the  restoration  of  the  gold 
and  silver  coinage  of  the  Constitution.  You  can  be  deceived, 
gentlemen,  if  you  want  to  be,  but  if  you  are  deceived  you  will 
1779 


33 

deceive  yourselves.  You  can  not  deceive  the  people.  The  evi- 
dences of  intent  are  too  plain.  The  great  New  York  daily  from 
which  I  read  tells  yon  that  the  death  knell  of  silver  has  already 
"been  sounded  because  there  are  cheaper  substitutes  for  silver;  and 
yet  you  expect  to  join  with  these  gentlemen  in  getting  the  substi- 
tutes and  then  hope  to  fool  them  alaout  the  effect  on  silver !  Do  not 
expect  to  fool  the  people  who  manufacture  our  financial  legisla- 
tion! They  may  not  know  what  the  public  needs,  but  they  know 
what  their  own  interests  demand  and  what  will  best  suit  their 
purposes,  when  they  propose  laws.  They  may  fail  in  prophesy, 
they  may  make  excuses  which  are  not  good,  but  they  drive  straight 
to  their  purpose,  and  that  purpose  is  the  annihilation  of  silver  as 
a  standard  money  of  this  country. 

This  bill  proposes  to  create  substitutes  for  money,  but  what  we 
need  is  not  more  stibstitutes  for  money  but  more  real  money. 
These  physicians  are  treating  symptoms  when  they  ought  to  be 
eradicating  disease;  they  are  trying  to  ciire  a  boil  when  they  oiTght 
to  be  purifying  the  blood.  The  money  question  can  not  be  settled 
by  turning  over  our  paper  currency  to  the  banks.  We  might  af- 
ford temporary  relief  to  the  Treasury  by  coining  the  seigniorage, 
redeeming  coin  obligations  in  silver  when  that  is  more  convenient, 
and  by  making  it  a  criminal  offense  to  present  greenbacks  and 
Treasury  notes  for  redemption  when  they  are  presented  for  the 
purpose  of  forcing  an  issue  of  bonds.  The  first  would  supply  more 
than  $50,000,000  to  meet  the  deficit,  the  second  would  enalale  the 
Treasurer  to  protect  the  Grovernment  from  the  raids  made  on  the 
gold  reserve  by  the  banks,  while  the  last  would  apply  the  same 
punishment  to  those  who  plunder  the  people  in  large  amounts  that 
we  now  apply  to  petty  criminals. 

It  is  true  that  it  might  be  difficult  to  prove  the  criminal  purpose 
of  those  presenting  the  notes  for  redemption,  but  it  would  be  some 
restraint  upon  wrongdoers  to  have  the  Government  declare  that 
those  who  conspire  to  lay  burdens  upon  the  people  for  the  pay- 
ment of  interest  on  bonds  needed  only  for  investment  stand  in  the 
same  attitude  as  men  who  conspire  to  rob  individuals  directly. 
But  even  these  measures,  while  giving  in  reality  the  relief  which 
this  bUl  falsely  pretends  to  give,  and  far  more,  would  only  be  a 
partial  remedy.  Let  us  go  further  and  strike  at.  the  root  of  the 
diflBculty  by  restoring  silver  to  its  ancient  place,  or,  if  you  will 
not  come  with  us,  then  have  the  courage  to  carry  out  your  idea 
to  its  legitimate  conclusion.  Do  not  longer  deceive  the  people 
with  shams  and  makeshifts. 

If  you  favor  the  continuance  of  the  gold  standard,  stand  up  like 
the  gentleman  from  New  York  [Mr.  Warner]  and  the  gentle- 
man from  Connecticut  [Mr.  Sperry]  and  advocate  the  funding 
of  all  greenbacks  and  Treasury  notes  with  gold  bonds  and  the  re- 
demption of  all  silver  and  silver  certificates  in  gold.  That  is  the 
only  alternative.  It  is  either  a  gold  standard,  with  more  bonds 
and  all  money  convertible  into  gold  on  demand,  or  it  is  the  restor- 
ation of  the  gold  and  silver  coinage  of  the  Constitution.  If  gold 
is  your  god,  follow  it;  but  if  you  shrink  from  the  incalculable 
evils  of  an  universal  gold  standard  come  with  us  and  help  in  the 
reestablishment  of  bimetallism.  To  those  who  are  really  in  favor 
of  the  use  of  both  gold  and  silver,  and  in  favor  of  other  needed 
reforms,  I  commend  the  platform  adopted  by  the  Nebraska  Demo- 
crats in  their  last  State  convention,  held  on  September  26,  1894. 
1779 3 


34 

I  quote  it  in  full,  for  it  covers  the  most  important  of  the  pending 
issues: 

We.  the  rank  and  file  of  the  Democracy  of  Nebraska,  at  last  in  convention 
assembled,  send  greeting  to  the  common  people,  who  constitute  the  strength 
of  the  Demoeraey  of  the  nation. 

We  renew  <mr  allegiance  to  the  principles  taught  by  Thomas  Jefferson  and 
courageously  defended  by  Andrew  Jackson,  and  we  demand  that  the  great 
politiral  ])riiblems  of  the  day  be  solved  by  the  application  of  these  principles 
to  present  <'i)nditions. 

Belie  \ing  that  a  public  oflacial  is  a  public  servant  and  deserving  of  praise 
or  censure  according  to  his  acts,  we  commend  President  Cleveland  for  his 
honest  and  economical  administration  of  the  Government  and  dissent  from 
such  of  his  financial  views  as  are  repugnant  to  the  teachings  of  the  fathers 
and  opposed  to  the  welfare  of  the  people. 

Believing  that  "  all  men  are  created  equal,"  and  that  all  are  alike  entitled 
to  the  consideration  of  government,  we  denounce  as  unjust  and  unjustifiable 
the  protective  tariff  system  which,  through  the  instrumentality  of  cl.i.ss  legis- 
lation, robs  the  many  for  the  benefit  of  the  few.  We  demand  a  tariff  for  rev- 
enue only,  and  point  to  the  Wilson  bill  as  it  passed  the  House  of  Representa- 
tives as  a  rea.sonable  fuliillment  of  the  promises  made  by  the  Democratic 
Earty  in  the  campaign  of  iSit-.  While  we  do  not  condone  the  acts  of  those 
lemocratic  Senators  who  modified  the  Wilson  bill  in  the  Senate,  we  accept 
the  bill  as  it  finally  passed  as  the  best  measure  attainable  under  the  circum- 
stances, and  as  a  great  improvement  over  the  McKinley  law. 

We  especially  approve  of  the  income  tax,  and  favor  its  retention  as  a  per- 
manent part  of  our  revenue  system. 

We  indorse  the  language  used  by  Hon.  John  G.  Carlisle  in  1878,  when  he  de- 
nounced the  "conspiracy  "  to  destroy  silver  money  as  "the  most  gigantic 
crime  of  this  or  any  other  age,"  and  we  agree  with  him  that  "the  consumma- 
tion of  such  a  scheme  would  ultiniiitely  entail  more  misery  upon  the  human 
race  than  all  the  wars,  pestilences,  and  famines  that  ever  occurred  in  the  his- 
tory of  the  world."  We  are  not  wUling  to  be  parties  to  such  a  crime,  and  in 
order  to  undo  the  wrong  already  done,  and  to  prevent  the  further  apjjrecia- 
tion  of  money,  tve  favor  the  immediate  restoration  of  the  free  and  unlimited 
coinage  of  gold  and  silver  at  the  present  ratio  of  16  to  L,  without  waiting  for 
the  aid  or  cottsrat  of  any  other  nation  on  earth. 

We  regard  the  right  to  issue  money  as  an  attribute  of  sovereignty  and 
believe  that  all  money  needed  to  supplement  the  gold  and  silver  coinage  of 
the  Constitution,  and  to  make  the  dollar  so  stable  in  its  purchasing  power 
that  it  will  defraud  neither  debtor  nor  creditor,  should  be  issued  by  the  Gen- 
eral Government,  as  the  greenbacks  were  issued;  that  such  money  should  be 
redeemable  in  coin,  the  Government  to  exercise  the  option  by  redeeming  in 
gold  or  silver,  whichever  is  most  convenient  for  the  Government.  We  be- 
lieve that  all  money  issued  by  the  Government,  whether  gold,  silver,  or  paper, 
should  be  made  a  full  legal  tender  for  all  debts,  public  and  private,  and  that 
no  citizen  siiould  be  permitted  to  demonetize  by  contract  that  which  the 
Government  makes  money  by  law. 

We  are  in  favor  of  the  election  of  United  States  Senators  by  direct  vote  of 
the  people,  and  in  case  the  Senate  refuses  to  allow  an  amendment  which  will 
secure  the  direct  election  of  Senators  we  are  in  favor  of  calling  a  convention 
of  States  to  submit  such  an  amendment  for  ratification  by  the  States. 

We  are  in  favor  of  a  constitutional  amendment  making  the  President  in- 
eligible for  reelection. 

We  are  in  favor  the  operation  of  the  telegraph  in  connection  with  the 
postal  system. 

We  are  in  favor  of  a  liberal  pension  policy. 

We  are  in  favor  of  the  arbitration  of  differences  between  corporate  em- 
ployers and  their  numerous  employees. 

We  are  in  favor  of  the  foreclosure,  as  soon  as  due,  of  the  liens  of  the  Gov- 
ernment against  the  Union  Pacific  and  other  Pacific  railroads. 

Believing  that  the  duty  of  the  representative  is  to  represent  the  will  and 
interests  of  his  constituents,  we  condemn  as  undemocratic  any  attempt  by 
caucus  dictation  to  prevent  the  representative  from  voicing  the  sentiments 
of  his  people  on  public  questions. 

We  believe  in  the  right  of  every  individual  to  worship  God  according  to 
the  di'tates  of  his  own  conscience,  and  we  condemn  as  un-American  and  con- 
trary ti>  the  spirit  of  our  institutions  any  attempt  to  apply  a  religious  test  to 
the  citizen  or  to  the  official.  We  appeal  to  all  Democrats  who  have  been  led 
into  political  hostility  to  the  members  of  any  church  to  remember  the  princi- 
ples of  religious  liberty  promulgated  by  Thomas  Jeflferson  and  defended  by 
the  party  which  he  organized. 

We  apprtjve  of  the  maximum-rate  bill  passed  by  the  last  legislature  and 
favor  its  reenactment  if  it  is  declared  void  by  the  court  on  account  of  irregu- 
larities which  can  be  remedied. 
1779 


35 

The  coinage  plank  announces  the  position  which  we  must  take 
if  we  expect  to  restore  silver.  We  do  not  ask  for  the  inauguration 
of  any  new  system,  but  we  ask  for  the  restoration  of  a  coinage 
system  which  existed  from  the  beginning  of  the  G-overnment  until 
1873.  We  ask  that  the  restoration  shall  be  immediate,  because  we 
can  not  afford  to  delay  for  a  single  day  the  amelioration  of  present 
conditions.  We  ask  that  the  coinage  shall  be  free  and  unlimited, 
because  the  coinage  of  gold  is  free  and  unUmited  and  because  the 
bimetallic  principle  can  not  be  reestablished  in  any  other  way. 
We  ask  for  coinage  at  the  present  ratio,  because  we  believe  that 
friendly  legislation  vsdll  restore  silver  to  its  former  place  without 
changing  the  ratio  and  because  a  change  in  the  ratio,  made  by 
increasing  the  size  of  the  silver  dollar,  would  lessen  the  number 
of  dollars,  appreciate  the  value  of  each  dollar,  add  to  the  burden 
of  all  debt,  and  further  depress  prices.  We  ask  for  independent 
action  by  this  country,  because  we  can  not  submit  the  rights  of  our 
people  to  the  action  of  other  nations  and  because  we  have  vainly 
waited  for  twenty  years  for  other  nations  to  help  us  to  help  our- 
selves. 

The  currency  plank  presents  an  idea  directly  opposed  to  the 
idea  embodied  in  the  pending  measure.  This  bill  looks  to  the  per- 
manent retirement  of  all  Government  paper  which  is  payable  in 
coin  and  the  substitution  therefor  of  bank  issues.  This  is  the 
challenge  which  the  President  throws  down.  We  meet  his  de- 
mand with  a  counter  demand  that  all  bank  notes  shall  be  retired 
and  that  all  paper  money  shall  be  supplied  by  the  Government. 
I  indorse  the  position  taken  in  the  platform  of  our  State  conven- 
tion, and  believe  it  more  in  harmony  with  Democratic  principles 
and  with  the  teachings  of  Jefferson  and  Jackson  than  is  the  new- 
fangled doctrine  which  has  been  borrowed  from  the  Republican 
party  and  incorporated  in  the  bill  now  before  us. 

The  amendment  which  will  be  proposed  by  the  gentleman  from 
Missouri  [Mr.  Bland]  embodies  our  plan  in  substance,  and  I  shall 
gladly  support  it.  It  provides  for  the  immediate  restoration  of 
the  free  and  unlimited  coinage  of  gold  and  silver  at  the  ratio  of 
16  to  1.  It  provides  that  the  paper  money  to  be  issued  shall  be 
redeemable  in  coin  and  that  the  Government,  not  the  note  holder, 
shall  have  the  option  as  to  the  kind  of  coin  and  may  pay  in  which- 
ever is  most  convenient.  The  amendment  also  provides  that  the 
money  issued  shall  be  a  full  legal  tender.  The  Supreme  Court  of 
the  United  States  has  decided  that  the  Government's  notes  may 
be  made  a  legal  tender,  and  I  believe  that  legal-tender  money  is 
better  than  any  other  kind  of  money.  Not  only  am  I  in  favor  of 
the  Government  supplying  all  the  paper  money  needed,  but  I  be- 
lieve that  it  can  and  ought  to  prevent  any  private  citizen  or  cor- 
poration from  setting  aside  the  legal-tender  laws  by  private  con- 
tract. Why  should  a  citizen  be  allowed  to  suspend  the  operation 
of  a  legal-tender  law  any  more  than  he  should  a  criminal  statute 
or  other  legislative  enactment? 

We  are  sometimes  asked  why  we  are  not  willing  to  compromise. 
Our  answer  is  that  principles  can  not  be  compromised.  No  com- 
promise has  been  offered  which  does  not  require  the  abandonment 
of  a  principle.  Gentlemen  plead  for  harmony,  but  there  can  be 
no  harmony  between  those  who  adhere  to  the  financial  views  of 
Mr.  Cleveland  and  those  who  adhere  to  the  financial  views  of 
Thomas  Jefferson.  Shall  we  go  with  our  opponents  farther  away 
1779 


36 

from  bimetallism  because  they  will  not  join  us  in  going  toward 
it?  Shall  we  join  oiuv-opponents  in  destroj-ing  what  Government 
paper  we  have  because  they  will  not  join  us  in  securing  more 
Government  paper?  Shall  we  join  our  opponents  in  establishing 
new  banks  of  issue  because  they  will  not  join  us  in  abolishing  the 
ones  we  now  have?  Gentlemen  say  that  something  must  be  done. 
Is  it  better  to  do  the  wTong  thing  than  to  do  nothing? 

If  the  Resident  is  determined  to  make  our  financial  bondage 
still  more  oppressive  than  it  now  is,  let  him  carry  out  his  purpose 
with  the  aid  of  a  Republican  Congress.  If  we  can  not  relieve  the 
people,  we  can  at  least  refuse  to  be  responsible  for  further  wrong 
doing. 

We  are  told  that  the  President  will  not  approve  any  bill  which 
carries  out  the  pledge  of  the  last  national  platform  in  favor  of  the 
coinage  of  gold  and  silver  without  discrimination  against  either 
metal  or  charge  for  mintiige,  biit  is  that  any  reason  why  we  should 
join  him  in  making  the  restoration  of  silver  more  difficult  for  the 
Administration  which  shall  succeed  his?  It  is  useless  to  shvit  our 
eyes  to  the  division  in  the  Democratic  party.  We  who  favor  the 
restoration  of  silver  deplore  the  division  as  much  as  our  oppo- 
nents; but  who  is  to  blame?  Did  not  the  President  ignore  the  sil- 
ver Democrats  in  making  up  his  Cabinet?  Has  he  not  ignored 
them  in  the  distribution  of  patronage?  Has  he  not  refused  to 
counsel  with  or  consider  those  Democrats  who  stand  by  the  tra- 
ditions of  the  party?  Did  he  not  press  through  Congress  with  all 
the  power  at  his  command  the  unconditional  repeal  of  the  Sher- 
man law,  in  spite  of  the  earnest  protest  of  nearly  half  the  Demo- 
cratic members  of  the  two  Houses?  And  did  he  not  join  with  the 
Republicans  to  defeat  the  seigniorage  bUl,  which  was  supported 
by  more  than  two-thirds  of  the  Democratic  party? 

Did  he  not  oppose  the  income  tax,  which  a  large  majority  of  the 
Democratic  party  favored?  Has  he  not  in  fact  joined  with  the 
Democrats  of  the  Northeast  time  and  again  to  defeat  the  wishes 
of  the  Democrats  of  the  South  and  West?  We  desire  harmony, 
but  we  can  not  purchase  it  at  a  sacrifice  of  principle.  We  desire  to 
live  on  friendly  terms  with  Mr.  Cleveland  and  our  Eastern  breth- 
ren, but  we  can  not  betray  our  people  or  trample  upon  their  wel- 
fare in  order  to  do  so.  If  the  partj'  is  rent  in  twain  let  the  re- 
sponsibility rest  upon  the  President  and  his  followers,  for  no  other 
Democratic  President  ever  tried  to  fasten  a  gold  standard  upon 
the  country  or  to  surrender  to  the  banks  the  control  of  oiu-  paper 
currency.  Let  the  fight  go  on.  If  this  bill  is  defeated  the  people 
will  profit  by  the  discussion  it  has  aroused.  I  have  confidence  in 
the  honesty,  iutelli^-ence,  and  patriotism  of  the  American  people, 
and  I  have  no  doubt  that  their  ultimate  decision  wUl  be  right. 
[Loud  applause.] 
1779 

O 


Gold  Bonds. 


Be  it  known  unto  thee,  O  king,  that  we  will  not  serve  thy  gods,  nor  worship 
the  golden  image  which  thou  hast  set  up.— />«?»>?,  3, 18. 


SPEECHES 


HON.    WILLIAM   J.    BRYAN, 

OF   NEBRASKA, 

In  the  House  of  Representatives, 

(UNDER   THE   FIVE-MINUTE   RULE) 

Febrvary  6th  and  7th,  1895. 

The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union 
and  having  under  consideration  tjie  bill  ( H.  R.  8705)  to  authorize  the  Secre- 
tary of  the  Treasury  to  issue  bonds  to  maintain  a  sufficient  gi>ld  reserve, 
and  to  redeem  and  retire  United  States  notes,  and  for  other  purposes — 

Mr.  BRYAN  said: 

Mr.  Chairman:  I  submit  that  the  amendment  proposed  by 
the  gentleman  from  Wisconsin  [Mr.  Haugen]  ought  to  be  de- 
feated, because  it  simiily  proposes  to  establish  more  national  banks; 
and  there  is  now  enough  influence  brought  to  bear  on  legis- 
lation by  the  banks  which  we  have,  without  establishing  new 
ones. 

So  far  as  the  amendment  proposed  by  the  gentleman  from  Illi- 
nois is  concerned,  I  want  the  House  to  understand  that  its  only 
effect  is  to  reduce  the  annual  tax  upon  bank  issues  from  1  per  cent 
to  a  quarter  of  1  per  cent.  And  I  hope  that  gentlemen  on  the  Re- 
publican side  of  the  House  who  are  so  anxious  for  some  measure 
to  increase  the  revenues  will  not  vote  for  this  amendment,  which 
is  going  to  decrease  the  revenues  of  the  Government.  Mr.  Chair- 
man, tiie  national  banks  have  advantages  enough  under  the  pres- 
ent law.  We  are  contending  against  the  whole  system ;  for  one 
reason,  because  it  extends  special  and  valuable  privileges  to  the 
banks,  and  I  insist 

Mr.  REED.  Why  not  introduce  an  amendment  providing  that 
this  amount  shall  come  out  of  the  surplus? 

Mr.  BRYAN.  Well,  Mr.  Chairman,  the  gentleman  from  Maine 
[Mr.  Reed]  is  in  an  excellent  position  to  advocate  this  amend- 
ment after  he  has  proposed  an  amendment  to  issue  bonds  to  make 
up  the  deficit.  In  other  words,  we  are  first  to  increase  the  deficit 
and  then  issue  bonds  to  make  it  up. 

Mr.  Chairman,  why  should  we  take  off  this  tax?  Why  should 
we  remove  any  part  of  the  light  burden  which  is  now  resting  upon 
these  institutions?  If  we  are  going  to  have  national  banks,  I 
think  we  should  rather  increase  the  tax  on  their  circulation  than 
decrease  it. 

1810  1 


Mr.  COX.    "Will  the  gentleman  yield  to  me  a  moment? 

Mr.  BRYAN.     I  have  but  five  minutes. 

Mr.  COX.    I  will  give  you  a  point.     [Laughter.] 

Mr.  BRYAN.  In  five  minutes  I  have  not  time  enough  to  dis- 
cuss the  points  I  now  have. 

Mr.  COX.  This  may  be  a  better  one  than  you  are  going  to 
make  yourself.     [Laughter.] 

Mr.  BRYAN.     Well,  give  it  to  me  quickly. 

Mr.  COX.  It  is  this:  The  bill  allows  these  banks  to  take  out 
circulation  equal  to  the  par  value  of  their  bonds,  and  now,  in  ad- 
dition, it  is  proposed  to  reduce  the  tax  on  their  circulation. 

Mr.  BRYAN.  Certainly,  the  point  is  a  good  one.  We  are  asked 
to  help  the  banks  both  ways.  We  ai-e  asked  to  increase  the  amount 
of  circulation  they  can  issue  and  then  decrease  the  tax  on  their 
circulation. 

But  I  want  to  say  a  word  in  regard  to  the  substitute  offered  by 
the  gentleman  from  Maine  [Mr.  Reed].  His  proposition  is  no 
better  than  that  of  the  gentleman  from  Illinois  so  far  as  gold  is 
concerned.  So  far  as  we  can  judge  by  the  action  of  the  gentle- 
man from  Maine  on  this  floor,  there  is  but  little  difference  between 
his  opinions  on  finance  and  the  opinions  of  the  President.  The  only 
difference  is  that  the  President  of  the  United  States  boldly  and 
frankly  tells  us  that  he  is  in  favor  of  the  gold  standard,  while  the 
gentleman  from  Maine  proposes  an  amendment  T/hich  means  the 
same  thing,  but  he  has  not  the  courage  to  tell  this  House  that  he 
indorses  the  President's  policy. 

Now,  if  I  were  compelled  to  choose  between  two  financiers — 
the  President,  who  boldly  advocates  a  financial  policy  which  we 
oppose,  and  one  who,  like  the  gentleman  from  Maine,  agrees 
with  the  President  but  will  not  declare  himself — I  should  prefer 
the  one  who  is  frank  enough  to  take  the  people  into  his  confidence. 
The  amendment  jiroposed  by  the  gentleman  from  Maine  allowing 
the  Treasury  Department  to  issue  bonds  of  different  kinds  is  a 
recognition  of  the  duty  of  the  Treasury  Department  to  pay  out 
gold  on  demand,  while  we  deny  the  construction  placed  by  the 
President  upon  the  law  and  oppose  any  further  issue  of  bonds, 
because  we  can  not  authorize  an  issue  of  bonds  without  indorsing 
the  position  taken  by  the  President. 

We  may  not  be  able  to  prevent  an  issue  of  bonds  by  the  Presi- 
dent, but  we  can  compel  him  to  bear  the  responsibility  alone.  If 
the  Secretary  of  the  Treasury  would  exercise  the  option  and  re- 
deem greenbacks  and  Treasury  notes  in  silver,  no  bonds  would  be 
necessary;  therefore,  to  authorize  the  issue  of  any  kind  of  bonds 
is  to  declare  that  the  President  is  right  in  paying  gold  on  demand, 
and  to  make  such  a  declaration  is  equivalent  to  saying  that  silver 
is  not  a  standard  money,  equal  to  gold  in  debt-paying  power.  We 
can  not  afford  to  make  such  a  declaration  because  it  is  an  aban- 
donment of  bimetallism. 

Mr.  BRYAN.  Mr.  Chairman,  if  we  require  the  payment  of 
customs  duties  in  gold,  we  either  put  gold  at  a  premium  by  creat- 
ing an  extra  demand  for  it,  or  else  persons  required  to  pay  duties 
in  gold  will  take  greenbacks  and  Treasury  notes  to  the  Treasury 
and  draw  out  the  gold  which  they  require  for  the  purpose  of  pay- 
ing the  duties. 

One  word  in  reply  to  the  gentleman  from  Iowa  [Mr.  Hender- 

1810 


son].  He  says  he  is  in  favor  of  the  greenback,  yet  he  supports 
the  substitute  offered  by  the  gentleman  from  Maine  [Mr,  Reed]  . 
The  gentleman  from  Maine  will  not  come  out  and  say  that  he 
wants  to  destroy  the  greenbacks,  but  he  wants  to  keep  them  idle 
in  the  Treasury  so  that  some  future  Congress  can  destroy  them 
if  it  wants  to  do  so.  If  those  greenbacks  are  good,  why  not  pay 
them  out  for  the  expenses  of  the  Government?  They  are  there 
in  the  Treasury.  "We  have  enough  of  them.  We  do  not  need  to 
issue  bonds  for  the  payment  of  our  expenses.  "We  have  green- 
backs enough  in  the  Treasury  now  to  pay  any  deficit  that  can 
possibly  occur  until  the  receipts  of  the  Government  equal  its  ex- 
penditures, according  to  the  estimate  of  the  Secretary  of  the 
Treasury. 

"We  do  not  need  any  short-time  bonds.  To  vote  short-time 
bonds  is  to  declare  that  we  will  draw  in  the  greenbacks  and  let 
them  remain  in  the  Treasury  until  they  can  be  destroyed.  I  want 
to  ask  the  gentleman  from  Iowa  [Mr.  Henderson]  if  he  is  really 
in  favor  of  the  greenbacks,  why  he  is  not  willing  to  let  them  be 
paid  out  in  meeting  the  expenses  of  the  Government?  Why  take 
in  these  greenbacks  and  hold  them  in  the  Treasury?  If  they  are 
good  money,  they  are'  good  enough  to  pay  our  current  exiienses 
with,  and  if  they  are  a  good  enoiigh  currency  with  which  to  pay 
our  running  expenses,  we  do  not  need  to  issue  long-time  bonds  or 
short-time  bonds  for  that  purpose. 

The  amendment  proposed  by  the  gentleman  from  Maine  em- 
braces two  propositions.  In  the  first  place,  it  really  indorses  the 
action  taken  by  the  President.  It  says  that  he  is  right  in  redeem- 
ing greenbacks  and  Treasury  notes  in  gold;  because  unless  they 
are  to  be  paid  in  gold  there  is  no  reason  why  bonds  should  be  is- 
sued. The  gentleman  from  Iowa  says  that  the  President  is  going 
to  do  this  in  order  to  maintain  the  credit  of  the  country  and  he 
commends  the  President's  determination. 

Mr,  Chairman,  I  for  one  do  not  believe  that  this  Government 
is  under  any  greater  obligation  to  maintain  its  credit  than  is  any 
private  individual.  I  believe  that  the  dollar  which  the  Govern- 
ment makes  good  en  )ugh  for  one  citizen  to  receive  from  another 
is  a  good  enough  dollar  for  the  Government  to  use  when  it  pays 
its  own  debts.  I  do  not  believe  the  Government  should  make  one 
rule  for  itself  and  another  rule  for  the  people  of  the  country.  If 
the  silver  dollar  is  good  enough  to  be  a  legal  tender  between  citizen 
and  citizen,  it  is  good  enough  for  the  Government  to  use  when  it 
pays  a  debt  which  it  owes.  I  am  not  in  favor  of  increasing  the  Gov- 
ernment indebtedness  and  discrediting  the  greenbacks,  as  proposed 
by  the  gentleman  from  Maine.  Why  is  not  the  same  coin  which 
is  receivable  between  individuals  in  payment  of  debts  good  enough 
to  redeem  the  greenbacks  or  any  coin  notes  or  the  bonds  of  the 
Government? 

«  •  •  «  •  «  • 

Mr.  BRYAN.  I  want  the  House  to  understand  what  they  are 
voting  on. 

Mr.  SPRINGER.  The  gentleman  from  New  York  will  explain 
this  provision. 

Mr.  BRYAN.    I  will  use  my  time  first. 

I  want  to  say,  sir,  that  the  present  law  provides  that  no  more 
than  $3,000,000  of  bank  currency  can  be  surrendered  in  any  one 
month  by  all  of  the  banks,  and  that  a  bank  which  surrenders  a 
1810 


part  of  its  currency  can  not  take  out  additional  currency  within 
six  months. 

Now.  the  purpose  of  that  provision  of  the  law  is  to  prevent  the 
natiimal  ])anks  from  expanding  or  contracting  the  currency  sud- 
denly. The  object  of  the  pending  amendment,  however,  is  to 
take  away  all  limitation  in  that  regard  and  give  the  national 
banks  ])ower  to  contract  or  expand  the  currency  at  will.  If  we 
adopt  this  amendment  we  remove  all  the  restricticms  now  exist- 
ing and  put  ourselves  absolutely  at  the  mercy  of  the  banks.  I 
hope  the  amendment  will  not  be  adopted. 

Thursday,  February  7, 1895. 

Mr.  BRYAN.  I  shall  offer  at  the  proper  time  an  amendment 
to  the  substitute  proposed  by  the  gentleman  from  Maine  [Mr. 
Reed].  1  understand  that  it  is  not  in  order  just  now,  but  I  shall 
ask  for  recognition  as  soon  as  it  is  in  order.     It  reads  as  follows: 

Provided,  That  nothing  heroin  shall  be  construed  as  suri-endering  the  right 
of  the  Government  of  the  United  States  to  pay  all  coin  bonds  outstanding  in 
gold  or  silver  coin  at  the  option  of  the  Government,  as  declared  by  the  fol- 
lowing joint  resolution,  adopted  in  IMT?  by  the  Senate  and  House  of  Repre- 
sentatives of  the  United  States  of  America,  to  wit: 

'■  That  all  the  bonds  of  the  United  States  issvied  or  authorized  to  be  issued 
under  the  said  act  of  Congress  horeinboforo  recited  are  payable,  principal 
and  interest,  at  the  option  of  the  Government  of  the  United  States,  in  silver 
dollars  of  the  coinage  of  the  United  States,  containing  WZh  grains  each  of 
standard  silver;  and  that  to  restore  to  its  coinage  such  silver  coins  as  a  legal 
tender  in  jiayment  of  said  bonds,  principal  and  interest,  is  not  in  violation  of 
the  public  faith  nor  in  derogation  of  the  rights  of  the  public  creditor." 

This  amendment  simply  reenacts  the  Matthews  resolution,  as  it 
is  called,  or  rather  expressly  declares  that  the  United  States  still 
adheres  to  the  doctrine  set  forth  in  that  resolution.  If  we  are  in 
favor  of  bimetallism  we  must  sustain  the  doctrine  set  forth  in  the 
Matthews  resolution,  for  it  simply  declares,  in  substance,  that 
the  word  "  coin,"  when  used  in  Government  bonds, ^means  stand- 
ard gold  and  silver  coin  of  the  United  States. 

I  desire  to  call  the  attention  of  the  House  to  the  recent  vote 
taken  upon  the  amendment  of  the  gentleman  from  Colorado  [Mr. 
Bell]  .  Our  friends  on  the  Republican  side  of  the  House  have 
been  telling  us  that  they  want  the  bonds  payable  in  coin;  that 
they  are  willing  to  authorize  the  President  to  issue  bonds,  but  are 
not  willing  to  vote  for  gold  bonds.  I  want  the  Record  to  show — 
because  the  vote  was  not  taken  by  yeas  and  nays — that  when  Mr. 
Bells  proposition  came  before  us — it  was  simply  to  strike  out  the 
word  "  gold  "  and  make  the  bonds  payable  in  gold  or  silver — there 
were  not  10  Republicans  who  rose  in  support  of  Mr.  Bell's  proposi- 
tion, and  that  all  the  other  members  who  rose  on  the  Republican 
side,  including  the  distinguished  gentleman  from  Maine  who  pro- 
poses the  substitute  providing  for  coin  bonds,  voted  against  Mr, 
Bell"s  proposition. 

I  also  want  to  call  attention  to  the  fact  that  the  ten,  or  less  than 
ten,  Republicans  who  voted  for  Mr.  Bell's  proposition  are  free-silver 
Republicans  who  live  in  the  Northwest:  and  if  the  gentlemen  on 
the  other  side  find  any  satisfaction  in  looking  at  the  division  in 
the  Democratic  party  on  the  silver  question,  I  ask  them  to  turn 
their  gaze  upon  their  own  party,  and  remember  that  in  their  party 
they  have  a  few  free-silver  Republicans  who  can  never  indorse  the 
policy  of  the  Republican  party  in  favor  of  a  gold  standard.  We 
have  been  divided  upon  this  side,  because  the  West  and  the  South 
will  not  consent  to  the  establishment  of  a  single  gold  standard. 

1810 


Mr.  BOWERS  of  California.     Which  side  do  you  mean? 

Mr.  BRYAN.  Our  side.  I  am  speaking  of  the  Democratic  side 
now. 

Mr.  DINGLEY.    You  are  on  the  Democratic  side,  are  you? 

Mr.  BRYAN.  The  gentleman  from  California  is  one  of  the  few 
Republicans  who  voted  for  Mr.  Bell's  proposition,  and  he  has  no 
more  sympathy  with  the  Republican  party  on  the  financial  ques- 
tion than  he  has  with  the  Eastern  Democrats  on  the  financial  ques- 
tion. 

Mr.  Chairman,  this  question  is  one  which  will  not  be  decided 
by  parties.  The  Democratic  party  and  the  Republican  party  are 
rent  in  twain  upon  the  money  question;  but  the  Republican  party 
has  a  larger  majority  in  favor  of  the  gold  basis  than  the  Demo- 
cratic party  has  ever  shown  on  this  floor.  I  believe  the  great  ma- 
jority of  the  Democratic  party  believe  in  bimetallism  and  willnot 
submit  to  a  gold  standard.  If  the  Republicans  who  voted  for 
Mr.  Bell's  proposition  expect  to  indorse  the  Republican  party  in 
its  financial  policy  they  will  have  to  betray  the  people  whom  they 
represent. 

I  also  call  attention  to  the  fact  that  west  of  the  Missouri  River 
not  a  single  gold-standard  Republican  has  been  elected  to  the  Sen- 
ate this  year. 

Mr.  BOWERS  of  California.  I  want  to  ask  the  gentleman  if 
the  proposition  made  by  the  Republican  leader  is  not  better  than 
the  proposition  made  by  the  Democratic  party  and  its  Administra- 
tion? 

Mr.  BRYAN.    No,  sir;  it  is  not. 

Mr.  BOWERS  of  California.  They  go  for  gold,  and  the  Repub- 
lican leader  will  not  go  for  gold.  [Applause  on  the  Republican 
side.] 

Mr.  BRYAN.  No,  sir;  his  proposition  is  not  better.  The  only 
difference  is  that  Mr.  Cleveland's  proposition  comes  before  us  open 
and  aboveboard,  while  your  leader  brings  his  proposition  here 
behind  a  mask.     [Applause  on  the  Democratic  side. J 

Mr.  BOWERS  of  California.  He  brings  a  proposition  to  pre- 
vent the  President  from  issuing  gold  bonds. 

Mr.  BRYAN.  When  the  gentleman  from  Maine  [Mr.  Reed]  , 
who  offers  a  pretended  "coin"  proposition,  had  a  chance  to  vote 
for  the  proposition  of  the  gentleman  from  Colorado  [Mr.  Bell] 
and  put  that  provision  in  the  Springer  bill,  he  refused  to  do  it  and 
voted  against  it.  Now  let  him  stand  before  the  country  and  con- 
vince the  people,  if  he  can,  that  he  is  sincere  in  his  desire  for 
bimetallism.     [Applause  on  the  Democratic  side.] 

The  Clerk  reported  the  next  amendment  reported  from  the  Com- 
mittee of  the  Whole,  as  follows: 

On  pa^e  3,  line  6,  insert  the  following: 

"And  in  lieu  of  all  existing  taxes  every  association  shall  pay  to  the  Treas- 
ury of  the  United  States  in  the  months  of  January  and  July  a  duty  of  one- 
eighth  of  1  per  cent  each  half  year  upon  the  average  amount  of  the  notes 
issued  to  it  by  the  Comptroller  of  the  Currency.  And  banks  with  a  capital  of 
not  less  than  |30,000  may,  with  the  approval  of  the  Secretary  of  the  Treasury, 
be  organized  in  any  place  the  population  of  which  does  not  exceed  6,000  in- 
habitants." 

Mr.  BRYAN.    I  call  for  a  division  of  those  two  propositions. 

Mr.  WILLIAMS  of  Mississippi.  They  were  voted  upon  sep- 
arately in  the  Committee  of  the  Whole. 

The  SPEAKER.     An  amendment  reported  from  the  Committee 
of  the  Whole  as  a  single  amendment  can  not  be  divided. 
1810 


6 

The  question  was  taken  on  the  amendment;  and  the  Speaker  an- 
nounced that  the  ayes  seemed  to  have  it. 

Mr.  BRYAN  demanded  a  division. 

The  Hoiise  divided;  and  there  were — ayes  200,  noes  41. 

Mr.  BRYAN  demanded  the  yeas  and  nays. 

The  yeas  and  nays  were  refused,  24  members,  not  a  sufficient 
number,  rising  to  second  the  demand  therefor. 

•  «««««« 

The  SPEAKER.    The  clerk  will  report  the  next  amendment 
agreed  to  by  the  Committee  of  the  Whole. 
The  clerk  read  as  follows: 

On  page  4,  in  section  6,  insert  tlu'  following:  after  the  word  "that: " 
So  much  of  all  laws  and  parts  of  laws  us  limit  the  amount  of  lawful  money 
which  may  be  deposited  during  any  (  alcndar  month  for  the  purpose  of  with- 
drawing national-bank  circulation,'or  prohibit  any  national  banking  associa- 
tion from  receiving  any  increase  of  its  circulation  during  the  period  of  six 
months  from  the  time  it  shall  have  made  any  deposit  of  lawful  money  for 
the  purpose  of  withdrawing  its  circulation,  and  also  so  much  of — 

The  question  being  taken  on  the  amendment,  the  Speaker  an- 
nounced that  the  ayes  seemed  to  have  it. 

Mr.  BRYAN  demanded  a  division. 

The  House  divided;  and  there  were — ayes  149,  noes  60. 

Mr.  BRYAN.     Yeas  and  nays. 

The  yeas  and  nays  were  refused,  18  members,  not  a  sufficient 
number,  rising  in  support  of  the  motion. 

4>  •  «  «  •  *  « 

Mr.  BRYAN.  Mr.  Chairman,  I  rise  to  offer  an  amendment  to 
the  substitute  proposed  by  the  gentleman  from  Maine  in  order 
that  it  may  be  pending. 

The  amendment  was  read,  as  follows: 

Provided,  That  nothing  herein  shall  be  construed  as  surrendering  the  right 
of  the  Government  of  the  United  States  to  pay  all  coin  bonds  outstanding  in 
gold  or  silver  coin  at  the  option  of  the  Government,  as  declared  by  the  fol- 
lowing joint  resolution,  adopted  in  IsTs  by  the  Senate  and  House  of  Repre- 
sentatives of  the  United  States  of  AnK-rica,  to  wit: 

That  all  the  bonds  of  the  United  Stutes  issued  or  authorized  to  be  issued 
under  the  said  act  of  Congress  liereinbrfore  recited,  are  payal)le,  principal 
and  interest,  at  the  option  of  the  (lovei-nnient  of  the  United  States,  in  silver 
dollars  of  the  coinage  of  the  United  States,  containing  412^  grains  each  of 
standard  silver:  and  that  to  restore  to  its  coiTiaL^c  such  silver  coin  as  a  legal 
tender  in  payment  of  said  bonds,  principal  and  interest,  is  not  in  violation  of 
the  public  faith  nor  in  derogation  of  the  rights  of  the  public  creditors. 

«  ♦  •  •  •  •  *      ' 

The  SPEAKER.  Now  the  Clerk  will  report  the  amendment 
offered  by  the  gentleman  from  Nebraska  [Mr.  Bryan]  to  the  sub- 
stitute that  has  just  been  read,  and  on  that  amendment  the  vote 
will  first  be  taken. 

The  question  being  taken  on  the  amendment,  the  Speaker  de- 
clared that  the  ayes  seemed  to  have  it. 

A  division  was  demanded. 

The  House  divided;  and  there  were — ayes  119,  noes  133. 

Mr.  BRYAN  and  Mr.  WILLIAMS  of  Mississippi  called  for  the 
yeas  and  nays. 

The  yeas  and  nays  were  ordered;  and  the  Speaker  appointed 
Mr.  Bryan  and  Mr.  Bingham  to  act  as  tellers  at  the  desk. 

1810 


The  question  was  taken;  and  there  were — yeas  127,  nays  169,  an- 
swered "  present  "3,  not  voting  50;  as  follows: 


YEAS— 137. 


Aitken, 

Alderson, 

Alexander, 

Arnold, 

Baker,  Kans. 

Bankhead, 

Beckner, 

Bell,  Colo. 

Black, 

Bland, 

Boatner, 

Boen, 

Bower,  N.  C. 

Bowers,  Cal. 

Branch, 

Breckinridge, 

Bretz, 

Broderick, 

Brookshire, 

Brown, 

Bryan, 

Caminetti, 

Clark,  Mo. 

Cobb,  Ala. 

Cockrell, 

Coffeen,  Wyo. 

Cooper,  "Wis. 

Cox, 

Crawford, 

Culberson. 

Curtis,  Kans. 

Davey, 


Adams,  Ky. 
Adams,  Pa. 
Aldinch, 
Avery, 
Babcock, 
Baker,  N.  H. 
Baldwin, 
Barnes, 
Bartlett, 
Barwig, 
Beltzhoover, 
Berry, 
Bingham, 
Blair, 
Boutelle, 
Brickner, 
Bromwell, 
Brosiuss, 
Bundy, 
Bynuin, 
Cabaniss, 
Cadmus, 
Campbell, 
Cannon,  Cal. 
Cannon,  111. 
Caruth, 
Causey, 
Chickering, 
Childs, 
Clancy, 
Clarke,  Ala. 
Cobb,  Mo. 
Coffin,  Md. 
Coombs, 
Cooper,  Fla. 
Cooper,  Ind. 
Cornish, 
1810 


Davis, 

De  Armond, 

Denson, 

Dinsmore, 

Dockery, 

Donovan, 

Doolittle, 

Edmunds, 

Ellis,  Ky. 

Ellis,  Oregon 

English,  Cal. 

Enloe, 

Epes, 

Fithian, 

Fyan, 

Grady, 

HaU,  Mo. 

Harris, 

Hartman, 

Hatch, 

Heard, 

Henderson,  N.  C. 

Hepburn, 

Hermann, 

Holman, 

Hooker,  Miss. 

Hopkins,  Pa. 

Hudson, 

Hunter, 

Hutcheson, 

Ikirt, 

Izlar, 


Kem, 

Kyle, 

Lane, 

Latimer, 

Lawson, 

Layton, 

Lester, 

Little, 

Livingston, 

Lucas, 

Maddox, 

Maguire, 

Mallory, 

Marsh, 

Marshall, 

McCreary,  Ky. 

McCulloch, 

McKeighan, 

McLaurin, 

McMilUn, 

McRae, 

Meredith, 

Money, 

Moore, 

Morgan, 

Moses, 

Neill, 

Newlands, 

Ogden, 

O'Neill,  Mo. 

Pendleton,  Tex. 

Pickler, 


Richardson,  Mich. 

Richardson,  Tenn. 

Ritchie, 

Robbins, 

Robertson,  La. 

Russell,  Ga. 

Sayers, 

Settle, 

Shell, 

Sibley, 

Simpson, 

Snodgrasa, 

Stallings, 

Stockdale, 

Stone,  Ky. 

Strait, 

Swanson, 

Talbert,  S.  0. 

Tarsney, 

Tate, 

Taylor,  Ind. 

Taylor,  Tenn. 

Terry, 

Turner,  Va. 

Turpin, 

Tyler, 

Wheeler,  Ala. 

Whiting, 

Williams,  111. 

Williams,  Mi33. 

Woodard. 


NAYS— 169. 


Cousins, 

Covert, 

Grain, 

Curtis,  N.  Y. 

Dalzell, 

Daniels, 

De  Forest, 

Dingley, 

DoUiver, 

Draper, 

Dunphy, 

Durborow, 

Erdman, 

Everett, 

Fielder, 

Fletcher, 

Forman, 

Gardner, 

Geary, 

Geissenhainer, 

Gillett,  Mass. 

Goldzier, 

Gorman, 

Gresham, 

Griffin,  Wis. 

Grosvenor, 

Grout, 

Grow, 

Hager, 

Hainer,  Nebr. 

Haines, 

Hall,  Minn. 

Hammond, 

Harmer, 

Harrison, 

Haugen, 

Hayes, 


Henderson,  lU. 

Henderson,  Iowa 

Hendrix, 

Henry, 

Hicks, 

Hitt, 

Hooker,  N.  Y. 

Hopkins,  HI. 

Hulick, 

Hull, 

Johnson,  N.  Dak. 

Kiefer, 

Kribbs, 

Lacey, 

Lapham, 

Lefever, 

Lockwood, 

Loud, 

Loudenslager, 

Lynch, 

Mahon, 

Marvin,  N.  Y. 

McAleer, 

McCleary,  Minn. 

MeDannold, 

McDowell, 

McGann, 

McKaig, 

McNagny, 

Meiklejohn, 

Mercer, 

Meyer, 

Montgomery, 

Moon, 

Mutchler, 

Northway, 

O'Neil,  Mass. 


Paschal, 

Patterson, 

Payne, 

Pearson, 

Pendleton,  W.  Va. 

Perkins, 

Phillips, 

Pigott, 

Powers, 

Quigg, 

Randall, 

Ray, 

Rayner, 

Reed, 

Reilly, 

Reyburn, 

Richards, 

Russell,  Conn. 

Ryan, 

Schermerhorn, 

Scranton, 

Sickles, 

Sipe, 

Smith, 

Somers, 

Sorg, 

Sperry, 

Springer, 

Stephenson, 

Stevens, 

Stone,  C.  W. 

Stone,  W.  A. 

Storer, 

Straus, 

Strong, 

Talbott,  Md. 


Van  V.).pi-his,N.Y. 

Warner, 

Wilson,  W.  Va. 

Van  V<i.>rliis.()hi<) 

Washington, 

Wise, 

Wa<ls\V(irth, 

Wauuh, 

Wolverton, 

Walkin-, 

Whei^Ier,  111. 

Woomer, 

Wanger, 

Wilson,  Ohio 

Wright. 

PRESENT-3. 

Kilgore, 

Wells. 

NOT  VOTING-50. 

Conn, 

Hines, 

Outhwaite, 

Cooper,  Tex. 

Houk, 

Pence, 

Diiun, 

Johnson,  Ind. 

Price, 

English,  N.  J. 

Johnson,  Ohio 

Robinson,  Pa, 

Funk, 

Linton, 

Rusk, 

Gear, 

Magner, 

Sherman, 

Gillet,  N.  Y. 

Martin,  Ind. 

Sweet, 

Goodnight, 

MfCall, 

Tucker, 

Graham, 

McDearmon, 

Weadock, 

Griffin,  Mich. 

MfEttrick, 

Wever, 

Haro, 

Milliken, 

White, 

Harter, 

Mor.se, 

Wilson,  Wash. 

Heiner,  Pa. 

Murray, 

Tawney, 
Thomas, 
Tracey, 
Turner,  Ga. 
Updegraff, 

Jones, 

Abbott, 

Allen, 

Apsley, 

Bailey, 

Bartholdt, 

Belden, 

Bell,  Tex. 

Bunn, 

Burnes, 

Capehart, 

Catchings, 

Cockran, 

Cogswell, 

So  the  amendment  of  Mr.  Bryan  to  the  substitute  of  Mr.  Reed 
was  rejected. 

The  following  pairs  were  announced: 

Until  further  notice: 

Mr.  Jones  with  Mr.  McCall. 

Mr.  Abbott  wnth  Mr.  Bartholdt. 

Mr.  Tucker  with  Mr.  Morse. 

Mr.  Allen  -with  Mr.  Johnson  of  Indiana. 

For  this  day: 

Mr.  Price  with  Mr.  Sweet. 

Mr.  Burnes  with  Mr.  Belden. 

Mr.  Martin  with  Mr.  Sherman. 

Mr.  McEttrick  with  Mr.  "Wever. 

Mr.  Weadock  with  Mr.  Gillet  of  New  York. 

Mr.  Catchings  with  Mr.  Gear. 

Mr.  English  of  New  Jersey  with  Mr.  "Wilson  of  "Washington. 

Mr.  Hare  with  Mr.  Robinson  of  Pennsylvania. 

Mr.  Bell  of  Texas  with  Mr.  Houk. 

On  this  question: 

Mr.  Graham  -with  Mr.  Cooper  of  Texas. 

Mr.  Bunn  with  Mr.  Dunn. 

Mr.  McDearmon  with  Mr.  Rusk. 

Mr.  Harter  with  Mr.  Kilgore. 

Mr.  Cockran  with  Mr.  Bailey. 

Mr.  Stevens  with  Mr.  Cogswell,  on  this  vote. 

Before  the  result  of  the  vote  was  announced — 

Mr.  PENCE.  On  this  roll  call  I  have  voted  "  aye,"  but  the  gen- 
tleman from  Massachusetts  [Mr.  Apsley],  who  has  been  sud- 
denly called  home  on  account  of  sickness  in  his  family,  requested 
before  leaving  that  I  arrange  a  pair  -udth  him  on  the  main  (ques- 
tion, which  I  suppose  should  be  construed  as  covering  this  vote. 
If  he  were  present  he  would,  on  this  question,  vote  '"no."  I 
withdraw  my  vote,  simply  stating  that  if  not  paired  I  should  vote 
in  the  affirmative. 

Mr.  BAILEY  (who  had  voted  in  the  affirmative).  The  gentle- 
men from  New  York  [Mr.  Cockran]  is  detained  from  the  House 
by  the  serious  illness  of  his  wife,  and  I  am  paired  with  him.  I 
therefore  withdraw  my  vote. 

The  result  of  the  vote  was  announced  as  al>^ve  stated. 

1810 


THE   GOLD   BOND    CON1 


'T  will  be  recorded  for  a  precedent, 

And   many  an  error,  by  the  same  example, 
Will   rush  into  the  state.     It  can  not  be. 

THE  MERCHANT  OF  VENICE. 


SPEECH 


HON.  WILLIAM  J.  BRYAN, 


OF  NEBRASKA, 


HOUSE  OF  REPRESENTATIVES, 


THURSDAY,  FEBRUARY  14,  1895. 


WASHINGTON. 
1895. 


SPEECH 

OF 

HON,   WILLIAM    J.    BRYAN 


The  House  having  under  consideration  the  joint  resolution  (H.  Res.  375)  au- 
thorizing the  issue  of  $65,116,275  of  gold  3  per  cent  bonds — 

Mr.  BRYAN  said : 

Mr.  Speaker:  This  resolution  embodies  two  piirposes.  It  pro- 
poses to  ratify  the  contract  made  by  the  Executive  by  authorizing 
the  substitution  of  gold  bonds  to  the  amount  of  $65,116,275,  bear- 
ing interest  at  a  rate  not  exceeding  3  per  cent,  and  payable  not 
more  than  thirty  years  after  date,  in  accordance  with  the  request 
made  in  the  President's  message,  and  it  also  provides  that  green- 
backs and  Treasury  notes  redeemed  with  the  gold  purchased  with 
these  bonds  shall  not  he  reissued. 

I  desire  to  call  the  attention  of  the  House  to  the  fact  that  the 
latter  provision  is  intended  to  lock  up  in  the  Treasury  $65,000,000 
of  legal-tender  jiaper  without  making  any  provision  whatever  to 
supply  the  place  of  that  currency.  If  we  vote  for  this  proposition, 
we  vote  to  retire  that  much  money  without  filling  the  void. 

Mr.  WARNER.  Will  the  gentleman  allow  me  to  ask  him  a 
question? 

Mr.  BRYAN.     I  hoj)e  I  shall  not  be  interrupted. 

Mr.  WARNER.     Does  not  the  gold  fill  the  void  ?    [Cries  of  "  No ! "] 

Mr.  BRYAN.  Mr.  Speaker,  the  House  knows  that  when  I  have 
time  I  never  object  to  questions,  and  it  is  only  because  of  my  limited 
time  to-day  that  I  ask  gentlemen  not  to  interrupt  me.  In  answer 
to  the  question,  however,  I  would  say  that  unless  the  greenbacks 
and  Treasury  notes  are  reissued  they  will  accumulate  and  a  few 
more  bond  issues  will  retire  all  of  them  and  deprive  the  country  of 
that  much  of  its  circulating  medium.  For  all  practical  purposes 
it  is  equivalent  to  a  cancellation  of  this  money  and  will  ofi'er  a  con- 
stant temptation  to  those  who  oppose  greenbacks  to  draw  out  the 
gold  and  force  further  issues  of  bonds  for  the  purpose  of  getting 
this  kind  of  money  out  of  the  way. 

But  the  main  question  presented  by  this  resolution  is  whether  we 
shall  ratify  tlie  contract  made  by  the  Executive  and  issue  gold 
bonds  in  order  to  save  about  a  half  million  a  year  in  interest.  The 
8Uiq5orters  of  this  resolution  urge  us  to  consider  it  as  a  business 
proposition  and  I  shall  discuss  it  as  a  business  proposition.  One 
gentleman  has  suggested  that  Democrats  ought  not  to  criticize  the 
Administration.  I  want  it  understood  that,  so  far  as  I  am  con- 
cerned, when  I  took  the  oath  of  office  as  a  member  of  Congress, 
there  was  no  mental  reservation  that  I  would  not  speak  out  against 
an  outrage  committed  against  my  constituents,  even  when  com- 
mitted by  the  President  of  the  United  States.  [Loud  applause.] 
1859  3 


The  President  of  the  Uuitod  States  is  only  a  man.  We  intrust 
the  administration  of  govornmeut  to  men,  and  when  we  do  so,  we 
know  that  they  are  lial)h'  to  err.  When  men  are  in  public  office 
we  exi)e('t  them  to  make  mistakes — even  so  exalted  an  ollicial  as  the 
President  is  liable  to  make  mistakes.  And  if  the  President  does 
make  a  mistake,  what  should  Con,i;ri'ss  do  If  Ouj:;ht  it  to  blindly 
approve  his  mistake,  or  do  we  owt!  it  to  the  people  of  the  United 
States,  and  even  to  the  President  himscdf,  to  correct  the  mistake  so 
that  it  will  not  be  made  a,i;ain?  But  some  jfentlemen  say  that  tiie 
Democratic  party  should  stand  by  the  President.  What  has  he  done 
for  the  party  sinci'  the  last  election  to  earn  its  gratitude?  1  want 
to  sugij'est  to  luy  l)enu)cratic  Iriends  that  the  jiarty  owes  no  great 
debt  of  gratitude  to  its  President.  What  gratitude  should  we  fed? 
The  gratitude  which  a  couliding  ward  feels  toward  liis  guardian 
without  bond  who  has  squandered  a  rich  estate.  Wliat  gratitude 
should  we  feel?  The  gratitude  which  a  passenger  feels  toward  the 
traininan  who  has  o])cned  a  switch  and  ])recipitatod  a  wreck.  What 
has  he  done  for  the  party  f  lie  has  attem])ted  to  inoculate  it  with 
Kepublican  vims,  and  blood  poisoning  has  set  in.  [Laughter  and 
applause.] 

What  is  the  duty  of  the  Democratic  party  ?  If  it  still  loves  its 
President,  it  is  its  duty,  as  I  under-stand  it,  to  prove  that  it  has  at 
least  one  attribute  of  divinity  left  by  chastening  him  whom  it 
loveth.     [Laughter  and  applause.] 

Mr.  Speaker,  I  do  not  intend  to  (jnestion  the  motives  of  the 
officials  who  are  responsible  for  this  contract.  We  might  criticize 
the  conduct  of  the  President  in  excluding  all  other  advisers  and 
consulting  only  with  the  magnates  of  Wall  street;  and  we  might 
even  suggest  that  he  could  no  more  expect  to  escape  unharmed  from 
such  associations  than  one  could  expect  to  escape  asphyxiation  if 
he  locked  liimself  up  in  a  room  and  turned  on  the  gas — but  without 
questioning  the  motive  of  the  President,  I  say.  we  have  a  right  to 
express  our  judgment  as  to  whether  the  discretion  vested  in  the 
President  has  been  wisely  exercised.  AVe  are  told  that  this  is  not 
only  a  business  proposition  but  a  very  insignificant  (|uestion — ^^just 
a  little  matter  of  saving  half  a  million  a  year,  that  is  all. 

Mr.  Speaker,  I  desire  to  ask  these  gentlemen  wlio  are  always 
coming  here  with  these  ''business  i^ropositions,"  why  it  is  that  no 
advocate  of  the  gold  standard  dares  to  stand  before  the  American 
people  and  unfold  the  full  plan  of  the  gold  conspiracy.  Why  is  it 
that  our  ojjponents  keep  bringing  up  one  proposition  at  a  time  and 
saying,  "  An  emergency  is  upon  us;  let  us  adopt  this  proposition  at 
once  and  leave  the  final  settlement  of  the  money  question  until 
some  other  time  ?  "  Why  is  it  that  we  never  reach  a  time  when  these 
gentlemen  are  willing  to  consider  the  greatest  of  all  the  questions 
which  are  demanding  settlement  at  the  hands  of  the  American  peo- 
ple! Save  $16,000,000  in  thirty  years?  Why,  sirs,  this  is  a  bigger 
question  than  $16,000,000. 

Will  you  set  a  price  upon  human  life?  Will  j-ou  weigh  in  the 
balance  the  misery  of  the  people?  What  is  the  value  of  civiliza- 
tion to  the  human  race — because  the  settlement  of  this  ''  little  ques- 
tion "  may  enormously  alfect  the  welfai'o  of  maukinfl.  [Applause.] 
And  yet,  gentlemen  talk  a1)out  its  being  a  matter  of  small  conse- 
quence, a  little  question,  the  mere  saving  of  half  a  million  dollars  a 
year.  Save  the  people  $16,000,000  in  thirty  years — twenty-five  cents 
apiece — by  this  resolution  and  $16,000,000,000  will  not  measure  the 
damage  which  may  result  to  them  in  a  third  of  that  time. 

What  is  this  contract?    I  am  glad  that  it  has  been  made  public. 

1859 


It  is  a  contract  made  by  the  Executive  of  a  great  nation  with  the 
representatives  of  foreign  money  loauers.  It  is  a  contract  made 
with  men  who  are  desirous  of  changing  the  financial  policy  of  this 
country.  They  recognize  by  their  actions  that  the  United  States 
has  the  right  to  pay  coin  obligations  in  either  gold  or  silver  and 
they  come  to  us  with  the  insolent  proposition,  "we  will  give  you 
$16,000,000,  paying  a  proportionate  amount  each  year,  if  the  United 
States  will  change  its  financial  policy  to  suit  us."  Never  before  has 
such  a  bribe  been  offered  to  our  people  by  a  foreign  syndicate,  and 
we  ought  to  so  act  that  such  a  bribe  will  never  be  offered  again. 
By  this  contract  we  not  only  negotiate  with  foreigners  for  a  change 
in  our  financial  policy  but  give  them  an  option  on  future  loans. 
They  are  to  have  the  option  on  all  bonds  which  may  be  issued  before 
the  first  of  next  October. 

What  would  be  the  effect  of  such  a  condition?  Do  you  suppose 
that  anybody  else  will  care  to  bid  when  it  is  known  that  these  men 
have  the  refusal  of  all  bonds  at  any  price?  It  makes  a  popular 
loan  impossible.  If  these  men  alone  bid  for  the  next  issue  they  can 
insist  upon  a  condition  that  they  shall  have  an  option  on  a  still 
further  issue  of  bonds.  Shall  we  bind  ourselves  to  these  men  jier- 
petually  ?  I  shall  not  raise  the  question,  because  I  am  not  prepared 
to  discuss  it  from  a  legal  standpoint,  whether  the  President  has  a 
right  to  sell  an  option  on  bonds  which  may  be  hereafter  issued,  but, 
sirs,  I  will  say  that,  if  he  has  the  right,  I  believe  he  has  made  an 
inexcusable  use  of  the  discretion  vested  in  him.  We  can  not  afford 
to  put  ourselves  in  the  hands  of  the  Rothschilds,  who  hold  mort- 
gages on  most  of  the  thrones  of  Europe. 

The  press  dispatches  stated  that  the  French  steamer.  La  Gascogne, 
when  she  came  into  jiort  a  few  days  a£:o,  had  three  red  lanterns  on 
her  foremast,  signifying:  "Get  out  of  the  way,  I  can  not  control 
my  course."  The  President  may  be  persuaded  that  this  country  has 
reached  a  point  where  it  cap  not  control  its  own  course  and  must 
supplicate  foreign  financiers  to  protect  our  treasury,  but  he  mis- 
takes the  sentiment  of  the  American  people  if  he  thinks  that  they 
share  with  him  in  this  alarm.  The  United  States  is  able  to  take  care 
of  itself.  It  can  preserve  its  credit  and  protect  its  people  without 
purchasing  at  a  high  price  the  "  financial  influence  "  or  the  "  legit- 
imate efforts  "  of  banking  corporations,  foreign  or  domestic. 

I  call  attention  also  to  the  fact  that  these  bonds  may  be  made 
payable  in  thirty  years.  The  contract  does  not  call  for  thirty-year 
bonds;  it  says  that  "any  bonds  of  the  United  States,"  payable  in 
gold,  and  drawing  3  per  cent  interest,  may  be  substituted  in  the 
place  of  the  coin  bonds.  Bub  there  seems  to  be  a  fear  that  the  bond 
buyers  may  insist  that  the  spirit  of  the  contract  would  compel  the 
issue  of  thirty-  year  bonds.  In  describing  this  contract,  Mr.  Speaker, 
I  find  in  "The  Merchant  of  Venice  "  language  more  expressive  than 
any  I  can  command.  That  language  fits  the  contract  which  we  are 
asked  to  ratify,  and  is  as  follows : 

Shtlock.  This  kindness -will  I  show: 

Go  with  me  to  a  notary,  seal  me  there 
Tour  single  bond,  and,  in  a  merry  sport, 

If  you  repay  me  not  on  such  a  day, 
In  siich  a  place,  such  sum  or  sums  as  are 

Express'd  in  the  condition,  let  the  forfeit 
Be  nominated  for  an  equal  pound 

Of  your  fair  flesh,  to  be  cut  off  and  taken 
In  wliat  p.art  of  your  body  pleaseth  me. 
*  i  i-  *  *  *  • 

AKTONIO.  Yes,  Shylock,  I  will  seal  unto  this  bond. 
1859 


6 

Mr.  BOWEN.  Who  wrote  that,  Shakespeare  or  Bacon?  [Laugh- 
ter.] 

Mr.  BRYAN.  I  shall  leave  Mr.  Donnelly  and  Mr.  Inftersoll  to  set- 
tle the  question  of  antliorship.  But,  Mr.  Speaker,  it  was  decided 
that  Sliylock's  bond,  wliilo  it  caHed  for  a  pound  of  llesli,  did  not 
include  any  blood.  The  ditVerence  between  the  construction  placed 
upon  that  bond  and  the  construction  which  this  House  is  asked  to 
place  upon  the  contract  before  us  is,  that  we  are  asked  to  make  the 
construction  so  liberal  as  to  include  the  blood  with  the  flesh.  We 
have  a  right,  according  to  the  terms  of  the  contract,  to  substitute 
a  short-time  bond,  and  yet  the  resolution  permits  the  Secretary  to 
issue  a  thirty -year  bond. 

This  House  is  not  prei)ared  to  give  its  sanction  to  a  policy  which 
contemplates  a  permanent  public  debt,  but  the  rule  adopted  allows 
no  opportunity  for  an  amendment  limiting  the  bonds  to  five  or  ten 
years.  If  we  give  the  Secretary  of  the  Treasury  authority  to  issue 
a,  thirty-year  bond,  he  is  i)owei-lcss  to  resist  the  demands  of  the 
bond  purchasers,  because  the  contract  is  made;  ten  days  only  are 
given  for  the  exercise  of  The  option;  lie  can  not  negotiate  with 
anyl>ody  else;  he  can  not  offer  bonds  to  anybody  else;  lie  is  in  their 
hands:  he  must  make  a  thirty-year  bond  if  they  ask  it — and 
who  doubts  that  they  will  ask  it? 

Tliere  is  another  objection  to  this  contract.  It  provides  for  the 
privntf  sale  of  coin  bonds,  running  thirty  years,  at  $1.04^  which 
onglit  to  be  worth  $1.19  in  the  open  market,  and  which  cuuld  have 
been  sold  at  jiublic  auction  for  $1.15  without  the  least  effort. 

Why  this  sacrifice  of  the  interest  of  the  United  States?  The 
Oovernment's  credit  was  not  in  danger;  the  bonds  of  tlie  United 
States  were  selling  in  the  market  every  day  at  a  regular  premium. 
The  same  kind  of  bonds,  having  only  twelve  years  to  run,  were 
selling  at  over  $1.12.  What  excuse  was  there  for  selling  a  thirty- 
year  bond  for$1.04|?  What  defense  can  be  made  for  this  gift  of 
something  like  seven  millions  and  a  half  dollars  to  the  bond  syndi- 
cate? We  are  told  that  we  can  avoid  the  sale  of  coin  bonds  at 
$1,041  by  authorizing  3  per  cent  gold  bonds.  What  a  privilege! 
Why,  it  is  less  tliau  three  montlis  since  ten-year  coin  Itonds  were 
sold  by  the  President  at  a  premium  which  reduced  the  rate  of 
interest  to  less  than  3  per  cent. 

Has  the  credit  of  the  country  fallen  so  much  in  three  months  that 
a  tliirty-year  3  per  cent  gold  bond  is  worth  less  now  than  a  ten- 
year  3  percent  coin  bond  was  then?  Nothing  has  occurred  within 
three  months,  excejit  the  President's  messages,  to  injure  the 
credit  of  the  country.  If  the  President  is  correct  in  assuming  that 
the  financial  world  places  a  higher  estimate  upon  gold  bonds  than 
upon  coin  bonds,  why  did  he  not  secure  a  higher  price  for  gold 
"bonds?  Did  not  purchasers  know  three  months  ago  that  coin  bonds 
coujd  be  paid  in  silver?  They  certainly  did,  and  yet  they  were 
willing  to  loan  money  on  those  bonds  lor  a  short  time  at  a  lower 
rate  of  interest  than  Messrs.  Morgan  and  Rothschild  now  offer  to 
loan  on  long-time  gold  bonds. 

But  why  are  gold  bonds  demanded?  Gentlemen  say  that  all  our 
bonils  are  in  fact  payable  in  gold  now.  They  either  are  payable 
in  gold  or  they  are  not.  If  they  are,  then  this  legislation  is  not 
needed;  if  they  are  not,  then  the  proposed  legislation  is  a  radical 
and  violent  change  of  jiolicy.  We  insist  that  outstanding  Vjonds 
are  payable  in  gold  or  silver  and  that  the  United  States  has 
the  right  to  choose  the  coin.  The  men  who  contracted  for  coin 
bonds  understood  this,  and  insisted  upon  a  higher  rate  of  interest 
1859 


on  the  ground  that  they  might  be  paid  in  silver.  By  what  author- 
ity, then,  does  the  President  declare  in  his  message:  "Of  course 
there  should  never  be  a  doubt  in  any  quarter  as  to  the  redemption 
in  gold  of  the  bonds  of  the  Government  which  are  made  payable  in 
coin."  Is  he  liot  aware  of  the  fact  that  the  debtor  always  has  the 
choice  of  the  coin,  where  only  coin  is  mentioned?  Is  he  not  aware 
of  the  adoption  of  the  Matthews  resolution  in  1878?  That  resolu- 
tion expressly  declared  the  right  of  the  Government  to  i)ay  its 
bonds  in  either  gold  or  silver.     The  resolution  reads  as  follows : 

That  all  the  bonds  of  the  United  States  Issued  or  authorized  to  be  issued  under 
the  said  act  of  Congress  hereinbefore  recited,  are  payable,  principal  and  interest, 
at  the  option  of  the  Government  of  the  United  States,  in  silver  dollars  of  the 
coinage  of  the  United  States,  containing  412^  grains  each  of  standard  silver;  and 
that  to  restore  to  its  coinage  such  silver  coin  as  a  legal  tender  in  payment  of  said 
bonds,  principal  and  interest,  is  not  in  violation  of  the  public  faith  nor  in  deroga- 
tion of  the  rights  of  the  public  creditors. 

That  policy  has  never  been  changed  by  law,  but  the  resolution 
before  us  makes  a  departure  from  the  settled  policy  of  the  Govern- 
ment and  provides  for  a  bond  payable  specifically  in  gold.  Do 
members  realize  the  influence  which  would  be  exerted  upon  the 
public  generally  by  the  adoption  of  this  resolution  ?  The  gentleman 
from  Florida  [Mr.  Cooper]  told  us  that  his  city  recently  issued  gold 
bonds  and  we  know  that  pressure  is  being  brought  to  bear  on  other 
cities  and  on  individuals  to  induce  them  to  enter  into  gold  contracts. 
If  the  Government  discredits  silver  by  making  these  bonds  payable 
in  gold  only,  it  will  set  an  example  which  will  go  far  toward  com- 
pelling all  borrowers  to  promise  payment  in  gold.  As  gold  contracts 
increase  in  number  the  demand  for  gold  will  increase. 

What  a  farce  for  men  to  talk  about  maintaining  the  parity 
between  the  metals  by  means  of  legislation  which  directly  tends  to 
destroy  the  parity  and  drive  gold  to  a  premium!  The  legislation 
proposed  will  either  pledge  the  Government  to  redeem  all  bonds  in 
gold  or  it  will  discredit  bonds  already  in  existence.  The  probabil- 
ity is  that  the  adoption  of  this  resolution  would  be  followed  imme- 
diately by  a  demand  from  the  holders  of  other  bonds  that  they  l)e 
put  upon  the  same  gold  footing.  I  say  probably;  I  may  say  that 
such  a  course  is  certain.  No  sooner  had  the  President  asked  for 
authority  to  issue  gold  bonds  than  his  faithful  lieutenant  in  the 
Senate,  Mr.  Hill,  oiiered  a  resolution  pledging  the  Government  to 
redeem  all  bonds  in  gold  if  gold  goes  to  a  premium.  This  remark- 
able resolution  reads  as  follows : 

Besolved  (if  the  House  of  Representatives  concurs),  That  it  is  the  sense  of  Con- 
gress that  the  true  policy  of  the  Government  requires  that  its  eiforts  should  be 
steadily  directed  to  the  establisbinent  of  a  safe  system  of  bimetallism,  -wherein 
gold  and  silver  may  be  luaintaiued  at  a  parity,  and  everj'  dollar  coined  may  be 
the  equal  in  value  and  power  of  every  other  dollar  coined  or  issued  by  tlie  United 
States ;  but  if  our  efforts  to  establish  or  maintain  such  bimetallism  shall  not  be 
wholly  successful,  and  if  for  any  reason  our  .silver  coin  shall  not  hereafter  be  at 
parity  -with  gold  coin  and  the  equal  thereof  in  v.alue  and  power  in  the  market  and 
in  the  payment  of  debts,  then  it  is  hereby  declared  that  the  bonds  of  the  United 
States  now  or  hereafter  issued  which  by  their  terms  are  payable  in  coin,  shall 
nevertlieless,  be  paid  in  standard  gold  dollars,  it  being  the  policy  of  the  United 
States  that  its  creditors  shall  at  all  times  be  paid  in  the  best  money  in  use. 

This  would  not  only  pledge  the  Government  to  the  payment  of 
previous  issues  in  gold  but  would  relieve  the  recent  purchasers  from 
the  loss  which  they  guarded  against  by  an  extortionate  interest  and 
yet  leave  them  to  enjoy  the  fruits  of  their  extortion.  Thus  does 
one  vicious  proposition  tread  upon  the  heels  of  another.  Mr.  Hill's 
plan  is  even  worse  than  the  President's,  for  under  the  plan  of  the 
latter,  the  bondholder  would  bear  whatever  loss  might  arise  if  gold 
1859 


8 

should  happen  to  fall  below  silver,  but  Mr.  Hill's  plan  burdens  the 
Governiuoiit  witli  all  the  risk  and  guarantees  to  the  bondhohler  all 
the  chance  of  gain.  Not  only  is  Mr.  Hill's  ])lan  directly  antagonistic 
to  the  princii)le  of  bimetallism,  but  it  otters  a  reward  to  the  creditor 
if  he  can  destroy  the  parity  between  the  metals,  whereas  tlie  cred- 
itor is  interested  in  malDtaining  the  parity  when  the  option  lies  with 
the  Government. 

It  is  alarming  to  note  the  aggressiveness  of  the  creditor  classes, 
and  humiliating  to  think  that  Congress  should  be  asked  to  comply 
with  tlieir  wishes  regardless  of  consequences.  The  first  effect  of 
this  movement  in  the  direction  of  gold  contracts  would  be  to  reduce 
the  amount  oPour  primarj'  money  and  to  build  our  entire  credit 
system  upon  a  narrow  base  of  gold.  Think  of  making  an  indebted- 
ne.ss,  public  and  private,  of  .$13,000,000,000,  payable  in  gold,  with 
only  $600,000,000  of  gold  in  the  country,  and  that  an  estimate! 

The  Government  estimate  of  gold  coin  in  the  United  States  on  the 
1st  of  January,  1895,  was  about  $000,000,000,  and  of  that  sum  only 
about  $214,000,000  was  visible.  About  $100,000,000  was  in  the 
Treasury  of  the  United  States,  and  $114,000,000  was  held  by  national 
banks.  Beyond  that,  no  one  knows  the  whereabouts  of  any  large 
amount  of  this  gold.  We  know  that  no  large  amount  of  gold  is  in 
circulation  among  the  people,  or  in  hiding,  and  yet,  with  only 
$214,000,000  of  visible  gold,  the  United  States  isexpe<-tod  to  conduct 
a  safe  business  on  a  gold  basis.  To  make  the  attempt  is  to  invite  a 
panic — nay,  more,  it  is  to  guarantee  disaster. 

And  yet,  Mr.  Speaker,  if  the  immediate  effect  is  bad,  the  ultimate 
effect  of  the  proposed  policy  is  infinitely  worse.  Every  act  of 
legislation  discriminating  against  silver  gives  an  impetus  to  the 
movement  in  favor  of  a  gold  standard  and  makes  the  restoration  of 
bimetallism  more  difficult.  No  one  act  could,  in  my  .judgment,  do 
more  to  obstruct  the  reestablishment  of  free  bimetallic  coinage  as 
it  existed  prior  to  1873  than  the  act  which  the  President  is  attempt- 
ing to  force  upon  Congress.  Are  the  gentlemen  who  are  urging  it 
deceived  as  to  its  purpose  and  necessary  effect  when  they  speak  of 
it  as  an  insignificant  matter,  or  do  they  presume  upon  the  credulity 
of  their  hearers?  Believing  that  it  is  a  long  step  in  the  direction 
of  universal  gold  monometallism,  and  believing  that  universal  gold 
monometallism  would  bring  to  this  country  continuous  and  increas- 
ing financial  distress  beyond  the  power  of  language  to  exaggerate, 
we  protest  against  the  passage  of  this  resolution.  If  we  love  our 
country  and  are  interested  in  its  welfare,  no  sacrifice  on  our  part 
should  be  too  great,  if  necessary  to  jirevent  the  adoption  of  such  a 
policy  by  this,  the  foremost  nation  upon  the  earth. 

While"  the  question  innuediately  before  us  is  whether  we  shall 
authorize  the  issue  of  gold  bonds,  I  ask  yon  to  consider  for  a  moment 
whether  we  need  to  issue  bonds  of  any  kind.  Bonds  have  been 
issued  to  replenish  the  gold  reserve,  and  the  gold  reserve  has  been 
drawn  out  because  the  holders  of  greenbacks  and  Treasury  notes 
have  been  allowed  to  designate  the  coin  of  redemption.  In  other 
words,  the  option  which  belongs  to  the  Government  has  bejen  sur- 
rendered to  the  holders  of  the  notes,  and  this  has  been  done,  not  by 
legislative  enactment,  but  by  an  administrative  policy.  If  the 
withdrawal  of  gold  could  be  stopped  no  bonds  would  be  necessary. 
It  becomes'important,  therefore,  to  know  whether  the  Government 
has  a  legal  right  to  protect  itself  from  gold  grabbing  by  redeeming 
greenbacks  and  Treasury  notes  in  silver  when  silver  is  more  con- 
venient. On  the  21st  of' January,  1895,  Secretary  Carlisle  made  a 
statement  before  the  House  Committee  on  Appropriations,  and  I 
18.59 


quote  the  following  question  and  answer  from  a  printed  report  of 
his  testimony: 

Mr.  Sibley.  I  would  like  to  ask  you  (perhaps  not  entirely  connected  with  the 
matter  under  discussion)  what  objection  there  could  be  to'  having  the  option  of 
redeeming  either  in  silver  or  gold  lie  with  tl>e  Treasury  instead  ot  the  note  holder? 

Secretary  Carlisle.  If  that  policy  had  been  adopted'at  tlie  beginniugof  resump- 
tion -and  I  am  not  saying  this  for  the  purpose  of  criticising  the  action  of  any  of 
my  predecessors,  or  anybody  else — but  if  the  policy  of  resei'ving  to  the  Govern- 
ment, at  the  beginning  of  resumption,  the  option  of  redeeming  in  gold  or  silver 
all  its  paper  presented,  I  believe  it  would  have  worked  beneflcially,  and  there 
would  have  been  no  trouble  growing  out  of  it,  but  the  Secretaries  of  the  Treasury 
from  the  begiuniug  of  resumption  have  pursued  a  policy  of  redeeming  in  gold  or 
silver,  at  the  option  of  the  holder  of  the  paper,  and  if  any  Secretary  had  after- 
wards attempted  to  change  that  policy  and  force  silver  upon  a  man  who  wanted 
gold,  or  gold  upon  a  man  who  wanted  silver,  and  especially  if  he  had  made  that 
attempt  at  such  a  critical  period  as  we  have  had  in  tlie  last  two  years,  my  judg- 
ment is,  it  would  have  been  very  disastrous.  There  is  a  vast  difference  between 
establishing  a  policy  at  the  beginning,  and  reversing  a  policy  after  it  has  been  long 
established,  and,  especially,  after  the  situation  has  been  changed. 

This  is  sufficient  proof  that  the  Secretary  of  the  Treasury  has  the 
legal  right  to  redeem  greenbacks  and  Treasury  notes  in  silver,  but 
is  restrained  by  the  fear  that,  a  different  precedent  having  been 
established,  an  exercise  of  the  legal  right  at  this  time  would  be 
"  very  disastrous." 

Senator  Sherman  in  March,  1878,  in  testimony  given  before  a  Sen- 
ate committee,  also  recognized  the  right  of  the  Government  to 
redeem  greenbaclis  with  silver.     I  quote  from  his  testimony : 

Senator  Bayard.  Tou  speak  of  resumption  upon  a  bimetallic  basis  being 
easier.  Do  you  make  that  proposition  irrespective  of  the  readjustment  of  the 
relative  values  of  the  two  motals  as  we  have  declared  them  ? 

Secretary  Sherman.  I  tliink  so.  Our  mere  right  to  -pity  in  silver  would  deter 
a  great  many  people  from  presenting  notes  for  redemption  who  would  readily  do 
so  if  they  could  get  the  lighter  and  more  portable  coin  in  exchange.  Besides  "gold 
coin  can  be  exported,  while  silver  coin  could  not  be  exported,  because  its  market 
value  is  less  than  its  coin  value.    *    *    * 

Senator  Bayard.  By  the  1st  of  July  next  or  the  1st  of  January  next  you  have 
eighteen  or  twenty  millions  of  silver  ilollars  which  are  in  circulation  and  payable 
for  duties,  and  how  long  do  you  suppose  this  short  supply  of  silver  and  your  con- 
trol of  it  by  your  coinage  will  keep  it  equivalent  to  gold — when  one  is"  worth  10 
cents  less  than  the  other  ? 

Secretary  Sherman.  Just  so  long  as  it  can  he  used  for  anything  that  gold  is 
used  for.  It  will  be  worth  in  this  country  the  par  of  gold  until  it  becomes  so 
abundant  and  bulky  that  people  will  become  tired  of  carrying  it  about;  but  in 
our  country  that  can  be  avoided  by  depositing  it  for  coin  certificates. 

No  law  has  ever  been  passed  surrendering  the  Government's  right 
to  redeem  in  silver;  and  it  is  as  valuable  now  as  it  was  just  after 
the  passage  of  the  Bland  law  of  1878,  which  restored  silver  as  a  i:)art 
of  our  standard  money.  The  testimony  above  quoted  was  given  by 
Senator  Sherman,  then  Secretary  of  the  Treasury,  soon  after  the 
passage  of  the  Bland  act  and  before  the  resumption  of  specie  pay- 
ment. 

Now,  notwithstanding  the  fact  that  the  Government  has  a  legal 
right  to  redeem  in  silver  and  thus  protect  the  people  from  the  gold 
hoarders  and  gold  exporters,  the  President  continues  to  pay  in  gold 
even  when  gold  must  be  purchased  by  an  issue  of  bonds,  and  we  can 
not  authorize  the  issue  of  any  bonds  for  the  purpose  of  buying  gold, 
without  indorsing  the  policy  which  permits  the  drain  of  gold  and 
thus  gives  an  excuse  for  a  bond  issue.  So  far,  the  surrender  to  the 
note  holder  of  the  right  to  designate  the  coin  of  payment  is  purely 
an  act  of  the  Executive  and  has  never  received  legislative  approval. 

If  it  is  said  that  the  President  will  issue  bonds  anyhow  and  that 
we  ought,  therefore,  to  authorize  a  bond  drawing  a  lower  rate  of 
interest,  I  reply  that  until  we  can  restrain  the  President  from 
1859 


10 

further  increasing  our  bonded  indebtedness  and  compel  him  to  pro- 
tect the  Government  by  redeeming  in  silver  when  that  is  more  con- 
venient, we  can  better  attbrd  to  allow  him  to  bear  the  responsibility 
alone  than,  by  a]ii)ri)ving  his  course,  pledge  the  Government  to  a 
continuation  of  his  jiolicy.  If  the  .Secretary  thinks  that  it  would 
now  be  disastrous  to  depart  Irom  a  jtrecedeut  established  by  a 
former  Secretary  of  the  Treasury,  liow  much  more  difficult  it  would 
be  to  change  the  poli  cy  after  once  indorsing  it  by  an  act  of  Congress. 

So  long  as  the  note  holder  has  the  option,  bonds  may  bo  issued 
over  and  over  again  without  avail.  Gold  will  be  withdrawn  either 
directly  or  indirectly  for  the  purpose  of  buying  bondfj,  and  an  issue 
of  bonds  compelled  again,  whenever  bond  buyers  have  a  surplus  of 
money  awaiting  investment.  This  experiment  has  been  tried,  but, 
instead  of  convincing  the  President  of  the  futility  of  bond  issues, 
it  has  simply  led  him  to  try  a  new  experiment.  By  purchasing  gold 
in  Europe  he  may  enlarge  the  circle  around  which  the  gold  must 
pass,  but  he  will  not  change  the  operation  or  protect  the  Govern- 
ment. The  onlj'  remedy  is  the  restoration  of  the  bimetallic  prin- 
ciple and  the  exercise  of  the  option  to  redeem  greenbacks  and 
Treasury  notes  in  silver  whenever  silver  is  more  convenient,  or 
whenever  such  a  course  is  necessary  to  prevent  a  run  upon  the 
Treasury.  To  delay  the  remedy  is  to  prolong  our  embarrassment; 
to  authorize  bonds  of  any  kind  is  to  rivet  upon  the  country  the 
policy  which  has  brought  our  present  troubles  upon  us ;  to  authorize 
bonds  payable  specifically  in  gold  is  to  invite  new  difficulties  and 
to  establisli  a  still  more  dangerous  precedent. 

I  am  glad  to  hear  some  of  our  Republican  friends  denounce  this 
gold-bond  proposition,  but  are  they  not  in  eflect  condemning  a 
Kepublican  policy?  The  gold  bond  is  the  legitimate  result  of  the 
policy  inaugurated  and  continued  by  Republican  administrations. 
It  was  a  Re])ublican  administration  which  first  surrendered  to  the 
note  holder  the  option  to  demand  gold  in  redemi)tion  of  greenbacks 
and  Treasury  notes,  and  it  was  rumored  that  President  Harrison 
was  prejiaring  to  issue  bonds  to  buy  gold  .just  before  his  term 
expired.  The  substitute  for  the  Springer  bill,  that  is,  the  substi- 
tute ottered  by  the  gentleman  from  Maine  [Mr.  Reed],  authoiized 
the  issue  of  coin  bonds  to  buy  gold,  and  yet  the  Republicans, 
almost  w'ithout  exception,  voted  for  that  substitute. 

I  ottered  an  amendment  to  the  Reed  substitute,  an  amendment 
"which  reaffirmed  the  Mathews  resolution  declaring  all  coiu  bonds 
payable  in  gold  or  silver,  and  yet  less  than  twenty  (I  think  only 
thirteen)  Republicans  voted  for  my  amendment.  The  great 
majority  of  the  Republicans  tlius  declared  that  coin  bonds  are  gold 
bonds  in  fact.  If  coin  bonds  are  really  gold  bonds,  there  is  less 
reason  for  agitation  about  the  use  of  the  word  gold  in  the  bond. 
We,  who  believe  that  greenbacks  and  Treasury  notes  are  redeemable 
in  eitlier  gold  or  silver  at  the  option  of  the  Government — we,  who 
believe  in  the  right  of  the  Government  to  redeem  its  coin  bonds  in 
either  gold  or  silver — we,  I  say,  can  object  to  gold  bonds  as  a 
violent  change  in  our  monetary  policy,  but  those  who  insist  that 
greenbacks,  Treasury  notes,  and  coin  bonds  are  all  payable  in  gold 
on  demand  have  far  less  reason  to  criticise  the  President. 

I  repeat,  the  President  is  simply  carrying  a  Republican  policy  to 
its  logical  conclusion.  If  the  Republicans  are  in  earnest  in  their 
opposition  to  gold  bonds  let  them  come  with  us  and  help  to  make 
all  bonds  unnecessary  by  restoring  the  bimetallic  principle  and 
exercising  the  option  vested  in  the  Government  to  redeem  coin  obli- 
gations in  either  gold  or  silver.  The  Government  is  helpless  so 
long  as  it  refuses  to  exercise  this  option. 
1859 


11 

Mr.  DUNN.     Don't  you  want  to  make  it  more  helpless? 

Mr.  BRYAN.  No,  sir ;  I  do  not  propose  to  make  it  more  lieljiless. 
I  jiropose  the  only  policy  which  will  help  the  Government.  I  pro- 
pose the  only  policy  which  will  stop  the  leak  in  the  Treasury.  I 
only  ask  that  the  Treasury  Department  shall  be  administered  in 
behalf  of  the  American  people,  and  not  in  behalf  of  the  Rothschilds 
and  other  foreign  bankers.     [Applause  on  the  Democratic  side.] 

But,  Mr.  Speaker,  I  desire,  in  conclusion,  to  call  the  attention  of 
our  Eastern  brethren  to  the  fact  that  this  controversy  can  be  no  longer 
delayed.  The  issue  has  come  and  it  mvist  be  met.  t)n  these  financial 
questions  we  find  that  the  Democrats  of  the  East  and  the  Republicans 
of  the  East  lock  arms  and  proceed  to  carry  out  their  policies,  regard- 
less of  the  interests  and  the  wishes  of  the  rest  of  the  country.  If 
they  form  this  union,  off'ensiv' e  and  defensive,  they  must  expect  that 
the  rest  of  the  people  of  the  country  will  drop  party  lines,  if 
necessary,  and  unite  to  preserve  their  homes  and  their  welfare. 
[Applause.] 

If  this  is  sectionalism,  the  East  has  set  the  example.  The  demand 
of  our  Eastern  brethren,  both  Republicans  and  Democrats,  is  for  a 
steadily  appreciating  monetary  standard.  They  are  creditors;  they 
hold  our  bonds  and  our  mortgages,  and,  as  the  dollars  increase  in 
purchasing  power,  our  debts  increase  and  the  holders  of  our  bonds 
and  mortgages  gather  in  an  unearned  increment.  They  are  seek- 
ing to  reap  where  they  did  not  sow;  they  are  seeking  to  collect 
that  to  which  they  are  not  entitled;  they  favor  spoliation  under  the 
forms  of  law.  The  necessary  result  of  their  policy  is  the  building 
up  of  a  plutocracy  which  will  make  servants  of  the  rest  of  the 
people. 

This  effort  has  gone  on  steadily,  and,  for  the  most  part,  stealthily, 
during  the  past  twenty  years,  and  this  gold  bond  proposition  is  but 
another  step  in  the  direction  of  financial  bondage.  But  I  warn 
them  that  no  slavery  was  ever  perpetual.  It  has  often  been  at- 
tempted, it  has  even  been  successfully  attempted  for  a  time,  but  the 
shackles  are  always  broken  at  last.  Bondage  is  ephemeral,  freedom 
is  eternal.  "Weeping  may  endure  for  a  night,  but  joy  cometh  in 
the  morning."     [Applause.] 

The  time  will  come  when  the  unjust  demands  and  the  oppressive 
exaofions  of  our  Eastern  brethi'en  will  compel  the  South  and  West 
to  unite  in  the  restoration  of  an  honest  dollar — a  dollar  which  will 
defraud  neither  debtor  nor  creditor,  a  dollar  based  upon  two  met- 
als, "the  gold  and  silver  coinage  of  the  Constitution."  "Thomas 
Jefferson  still  survives"  and  his  principles  will  yet  triumidi.  He 
taught  equality  before  the  law ;  he  taught  that  all  citizens  are 
equally  entitled  to  the  consideration  of  government;  he  taught 
that  it  is  the  highest  duty  of  government  to  protect  each  citizen 
from  injury  at  the  hands  of  any  other  citizen.  We  seek  to  apply 
his  princijiles  to-day  to  this  great  question;  we  seek  to  protect  the 
debtor  from  the  greed  of  the  creditor;  we  seek  to  protect  society 
from  the  avarice  of  the  capitalist.  We  believe  that  in  the  restora- 
tion of  bimetallism  we  shall  secure  the  reestablishment  of  equity 
and  restore  prosperity  to  our  country.     [Prolonged  applause.] 

Appendix. 

contract. 

This  agreement  entered  into  this  8th  day  of  February,  1895,  between  the 
Secretary  of  the  Treasury  of  the  United  States,  of  the  first  part,  and  JNIessrs. 
August  Belmont  &  Co.,  or  New  York,  ou  behalf  of  Messrs.  N.  M.  Rothschild 
1859 


12 

&  Sons,  of  London,  England,  and  themselves,  and  Messrs.  J.  P.  Morgan  & 
Co..  of  New  York,  on  behalf  of  Messrs.  J.  S.  Morgan  &  Co.,  of  London,  and 
themselves,  parties  of  the  sfcimd  part. 

Witnesseth:  Whereas  it  is  provided  by  the  Revised  Statutes  of  the  United 
States  (section  37IK1)  tliat  the  Secretary  of  tlu?  Treasury  may  purcha.so  coin 
with  any  of  the  bonds  or  notes  of  the  United  States  authorized  by  law, at 
such  rates  and  upon  such  terms  as  he  may  deem  most  udvaiitavceous  to  the 
pulilic  interests;  and  the  Secretary  of  the  Treasury  now  dccuis  tliat  an  emer- 
gency exists  in  whicl)  tile  puMic  interests  retiuire  that. as  hereinafter  pro- 
vided, coin  shall  lie  purchasi-d  with  the  bondsof  the  United  States,  of  the  de- 
scription hertniiafter  meiitioiii>d,;iut!io!-i/,ed  to  be  issued  under  the  act  enti- 
tled "An  act  to  provide  for  the  resumption  of  specie  payments,"  approved 
January  14,  1875,  being  bondsof  the  LTnited  States  described  in  act  of  Con- 
gress approved  July  11,  1870,  entitled  "An  act  to  authorize  the  refunding  of 
the  natioiKil  debt." 

Now,  therefore,  the  said  jiartiesof  the  second  part  hereby  agree  to  sell  and 
deliver  to  the  United  States  ;i.r)()().0(K)  ounces  of  standard  gold  coin  of  the 
United  States. at  the  rate  of  $17.S()U1  per  ounce,  payaljlo  in  United  States  4 
per  cent  thirty-year  coupon  or  registered  bonds,  said  lionds  to  be  dated  Feb- 
ruary 1,1  WI5,  and  j)ayable  at  the  pleasure  of  the  United  States  after  thirty 
years  from  date,  i.ssiied  under  the  acts  of  Congress  of  July  14, 1870,  January 
20, 1S71.  and  January  14,  ls7."),  bearing  interest  at  the  rate  of  of  4  per  cent  per 
annum,  jiayablo  (puirterly. 

First.  Siich  purchase  and  sale  of  gold  coin  being  made  on  the  following  con- 
ditions: 

1.  At  least  one-half  of  all  coin  deliverable  hereinunder  shall  be  obtained  in 
and  shipped  from  Europe,  but  the  .shipments  shall  not  be  required  to  exceed 
SOO.ttoo  ounces  per  month,  unless  the  parties  of  the  second  part  shall  consent 
thereto. 

2.  All  deliveries  shall  lio  made  at  any  of  the  subtreasuries  or  at  any  other 
legal  deposit(.)ry  of  the  United  States. 

3.  All  gold  coins  delivered  shall  be  received  on  the  basis  of  25.8  grains  of 
standard  gold  jier  dollar,  if  williiu  limit  of  tolerance. 

4.  Bonds  delivered  under  this  contract  are  to  be  delivered  free  of  accrued 
interest,  which  is  to  be  assumed  and  paid  by  the  parties  of  the  second  part 
at  the  time  of  their  delivery  to  them. 

Second.  Should  the  Secretary  of  the  Treasury  desire  to  offer  or  sell  any 
bonds  of  the  United  States  on  or  before  the  1st  day  of  October,  1895,  he  shall 
first  offer  the  same  to  the  iiarties  of  the  second  part;  but  thereafter  he  .shall 
be  free  from  every  such  obligation  to  the  parties  of  the  second  part. 

Third.  The  Secretary  of  the  Treasury  hereby  reserves  the  right,  within  ten 
days  from  the  date  hereof,  in  case  he  shall  receive  authority  from  Congress 
therefor,  to  substitute  any  bonds  of  the  United  States,  bearing  3  percent  in- 
terest, of  whicli  the  principal  and  interest  shall  be  sjiecifically  payable  in 
United  States  gold  coin  of  the  present  weight  and  fineness  for  the  bonds 
herein  alluded  to:  such  3  per  cent  bonds  to  be  accepted  by  the  parties  of  the 
second  part  at  par.  i.  e.,  at  §18.6041)5  per  ounce  of  standard  gold. 

Fourtli.  No  bonds  shall  be  delivered  to  the  parties  of  the  second  part,  or 
either  of  them,  except  in  payment  for  coin  from  time  to  time  received  here- 
under: whereupon  tlie  Secretary  of  the  Treasury  of  the  United  States  shall 
and  will  deliver  the  bonds  as  herein  provided,  at  such  places  as  shall  be  desig- 
nated by  the  parties  of  the  second  part.  Any  expense  of  delivery  out  of  the 
United  States  shall  be  assumed  and  paid  by  the  parties  of  the  second  part. 

Fifth.  In  consideration  of  the  purchase  of  such  coin,  the  parties  of  the 
second  part,  and  their  associates  hereunder,  assume  and  will  bear  all  the  ex- 
pense and  inevitable  loss  of  bringing  gold  from  Europe  hereunder;  and,  as  far 
as  lies  in  their  power,  will  exert  all  financial  influence  and  will  make  all  legiti- 
mate efforts  to  protect  the  Treasury  of  the  United  States  against  the  with- 
drawals of  gold  pending  the  complete  performance  of  this  contract. 

In  witness  whereof  the  parties  hereto  have  hereunto  set  their  hands  in  five 
parts  this  8th  day  of  February,  1895. 

J.  G.  CARLISLE, 

Secretary  of  the  Treasury. 
AUGUST  BELMONT  &  CO., 
On  behalf  of  Messrs.  JV.  M.  Rothschild  <t'  Sons.  London,  and  themselves. 

J.  P.  MORGAN  &  CO., 
On  behalf  of  Messrs.  J.  S.  Morgan  <&  Co..,  London,  and  themselves. 
Attest: 

W.  E.  Curtis. 

Francis  Lynde  Stetson. 

1859 


13 

VIEWS  OF  THE  MINORITY. 

(On  H.  Res.  275.) 

Owing  to  the  limited  time  allowed  for  preparing  a  report  (it  being  neces- 
sary to  file  the  report  within  a  few  hours  after  the  bill  was  agreed  upon)  the 
undersigned  dissenting  members  of  the  committee  are  precluded  from  pre- 
senting their  views  with  that  elaboration  which  the  importance  of  the  sub- 
ject woiild  otherwise  justify;  but  they  beg  to  state  briefly  the  most  impor- 
tant reason  which  leads  them  to  disapprove  of  the  measure  recommended  by 
the  majority  of  the  committee. 

First.  The  issue  of  bonds  of  any  kind  is  only  needed  to  replenish  the  gold 
reserve;  and  the  gold  reserve  only  needs  replenishing  because  the  Secretary 
of  the  Treasury  redeems  United  States  notes  and  Treasury  notes  in  the  kind  of 
coins  selected  by  the  note  holder.  The  note  holder  has  no  legal  right  to  choose 
the  coin  in  which  the  obligation  shall  be  redeemed,  but  has  been  permitted  to 
exercise  that  right  by  a  policy  inaugurated  by  the  Treasury  Department  at 
or  soon  after  tHe  date  of  the  resumption  of  specie  payment.  The  opinion  of 
the  Secretary  of  the  Treasury,  Mr.  Carlisle,  recently  given,  is  clear  upon 
this  point.  On  the  21st  of  January,  1895,  a  statement  was  made  before  the 
House  Committee  on  Appropriations  by  Secretary  Carlisle,  in  a  printed  re- 
port of  which  wUl  be  found  the  following  question  and  answer: 

"Mr.  Sibley.  I  would  like  to  ask  you  (perhaios  not  entirely  connected  with 
the  matter  under  discussion)  what  objection  there  could  be  to  having  the 
option  of  redeeming  either  in  silver  or  gold  lie  with  the  Treasury  instead  of 
•  the  note  holder? 

Secretary  Carlisle.  If  that  policy  had  been  adopted  at  the  beginning  of 
resumption— and  I  am  not  saying  this  for  the  purpose  of  criticising  the  action 
of  any  of  my  predecessors,  or  anybody  else— but  if  the  policy  of  reserving  to 
the  Government,  at  the  beginning  of  resumption,  the  option  of  redeeming  in 
gold  or  silver  all  its  paper  presented,  I  believe  it  would  have  worked  benefi- 
cially, and  there  would  have  been  no  trouble  growing  out  of  it;  but  the  Sec- 
retaries of  the  Treasury  from  the  beginning  of  resumption  have  pursued  a 
policy  of  redeeming  in  gold  or  silver  at  the  option  of  the  holder  of  the  paper, 
and  if  any  Secretary  had  afterwards  attempted  to  change  that  policy  and 
force  silver  upon  a  man  who  wanted  gold,  or  gold  upon  a  man  who  wanted 
silver,  and  especially  if  he  had  made  tliat  attempt  at  such  a  critical  period  as 
we  have  had  in  the  last  two  years,  my  judgment  is,  it  would  have  been  very 
disastrous.  There  is  a  vast  difference  between  establishing  a  policy  at  the 
beginning,  and  reversing  a  policy  after  it  has  been  long  established,  and  espe- 
cially after  the  situation  has  been  changed." 

No  one  contends  that  the  executive  department  of  the  Government  can 
bind  the  Government  or  pledge  its  faith  and  credit  by  the  adoption  of  .siich 
a  policy.  To  so  hold  woxxld  be  to  assert  that  the  Executive  can  make  and  re- 
peal laws  without  the  concurrence  of  the  Senate  and  House  of  Representa- 
tives. Believing  that  the  Secretary  of  the  Treasury  has  now  by  law  the 
right  to  redeem  legal-tender  notes  by  the  payment  of  either  gold  or  silver  coin, 
whichever  is  most  convenient  for  the  Government;  and  believing  that  the 
exercise  of  this  discretion  by  the  Secretary  of  the  Treasury  is  absolutely 
necessary  to  protect  the  Government  fi'om  organized  and  unorganized  raids 
upon  the  coin  reserve,  we  are  not  willing  to  indor.se,  directly  or  by  implica- 
tion, the  administrative  policy  which  has  lu-ecipitated  the  present  financial 
conditions.  Neither  are  we  willing,  by  authorizing  bonds  for  the  purchase 
of  gold,  to  pledge  the  Governm(mt  to  a  policy  which  discriminates  against 
sUver  as  a  standard  money  and  recognizes  gold  as  the  only  money  of  ulti- 
mate redemption.  So  long  as  the  note  holder  is  allowed  to  choose  the  coin 
in  which  he  is  to  be  paid,  so  long  will  it  be  futile  to  attempt  to  maintain  a 
gold  i-eserve. 

Recent  experience  shows  that  gold  secured  by  the  issue  of  bonds  is  at  once 
drawn  out  by  those  who  are  interested  in  having  more  bonds  issued,  and  thus 
the  public  debt  is  increased  to  the  detriment  of  the  taxpayer  and  for  the 
benefit  only  of  those  who  desire  a  safe  investment  for  surplus  funds.  We  do 
not  believe  that  any  real  advantage  will  be  gained  by  securmg  the  gold  abroad. 

It  is  urged  that  a  change  of  policy  at  this  time  will  cause  embarrassment. 
If  that  be  true  the  blame  must  be  borne  by  those  who  first  inaugurated  the 
policy  and  by  those  who  have  adhered  to  it  in  spite  of  the  clear  intent  and 
letter  of  the  law.  We  have  only  to  consider  whether  it  is  wiser  to  resume  an 
exercise  of  rights  preserved  by  existing  laws  or  to  aggravate  our  present 
difficulties  by  delaying  relief  and  entering  upon  new  experiments.  We  have 
no  hesitation  in  declaring  it  as  our  conviction  that  there  is  no  remedy,  per- 
manent in  character  or  promising  in  results,  except  an  immediate  exercise  by 
the  Secretary  of  the  Treasury  of  the  right  to  redeem  United  States  notes  and 
Treasury  notes  in  standard  silver  coin  whenever  it  is  more  convenient  for  the 
Government  to  do  so,  and  we  further  believe  that  the  greatest  dangers  which 
can  possibly  attend  such  a  course  are  infinitely  less  than  the  evils  which  are 
certain  to  follow  an  adherence  to  the  present  policy. 
1859 


14 

Second.  If  we  were  willine  to  aiithoi'ize  the  issue  of  bonds  at  this  time  to 

gurchase  gold,  we  would  still  Ijo  opposed  to  bonds  i);iyabl('  S])ecifically  in  gold, 
ecause  an  issue  of  such  bonds  would  either  pleagi' the  (Tovernnient  to  the 
redemption  of  all  obligations  in  gold  or  make;  a  (liscriiniuatiou  against  coin 
obligations  now  outstanding.  There  is  no  ((Ul^stioIl  that  tlu'  issue  of  gold 
bonds  now  would  at  om-c  bt>  followed  by  a  demand  for  hii  art  making  existing 
bonds  payable  in  gold,  and  it  would  be  urged  that  it  would  be  disastrous  to 
depart  Irom  tlie  policy  of  gold  bonds  when  oiicc  inaugurated,  just  as  it  is  now 
urged  that  it  will  be  disasti'ous  for  the  (■Jovernmunt  to  resume  a  discretion 
which  has  Ijeen  temporarily  sni-rendered  to  the  note  hokler. 

It  is  impossible  to  overestimate  the  isvil  influence  which  would  be  exerted 
by  the  issue  of  gold  bonds  by  the  government,  because  such  action  would 
naturally  and  iie<'essarily  encoura'..;e  if  not  actually  compel  the  i.ssue  of  gold 
bonds  by  all  public  and  private  corjiorations  and  the  making  of  gold  c(mtracts 
by  individuals  generally.  Such  an  increased  strain  upon  gold  would  manifest 
itself  in  a  further  risein  the  purchasing  i)ower  of  th(^  dollar  and  in  a  fur- 
ther and  distressing  addition  to  the  load  of  debt  now  borne  by  the  people. 

Third.  If  we  were  in  favor  of  an  issue  of  gold  bonds  we  would  stilloe  op- 
posed to  the  issue  of  bonds  running  for  tliirty  years.  According  U>  the  terms 
of  the  contract  tlu'  bond  juirchasers  agree  to  accept  3  per  cent  gohl  bonds 
without  mentioning  the  date  of  payment,  but  it  can  not  oe  doubted  that  the 
purchasers  will  insist  u])on  a  thii'ty  year  bond  if  discretion  is  given  to  the 
Secretary  of  the  Treasury  to  issue  such  a  bond. 

Fotirth.  If  W(!  W(!re  willing  to  authorize  the  issue  of  thirty-year  gold  bonds 
we  Would  still  be  opposed  to  recognizing  or  ratifying  a  contract  as  harsh  in 
its  terms  and  as  imperious  in  its  demands  as  the  contract  insisted  upon  by 
the  bond  \^iur<'ha.sers. 

Fifth.  It  we  were  willing  to  approve  of  such  a  contract  under  ordinary 
circumstances  we  would,  still  bo  opposed  to  approving  it  when  made  by  a  sov- 
ereign gt)vernment  with  foreign  financiers  under  circumstances  which  sug- 
gest a  desire  upon  the  part  of  the  subjects  of  another  country  to  purchase  a 
change  in  the  hnaiicial  policy  of  this  nation  for  a  sum  stated. 

These  are  some  of  the  reasons  which  lead  us  to  withhold  our  support  from 
the  measure  recommended  by  a  majority  of  the  committee,  and  they  are,  in 
our  judgment,  sullicient  to  justify  our  dissent.  If  further  reasons  were  nec- 
essary tliey  might  be  found  in  the  fact  that  the  contract  provides  for  the  sale 
of  coin  bonds  at  about  lO-W,  which  would  sell  in  the  market  at  about  119;  in 
the  fact  that  the  contract  agrees  to  sell  thirty-year  gold  bonds,  drawing  3 
per  cent  interest,  for  less  than  the  Government  three  months  ago  sold  twelve- 
year  coin  bonds,  and  in  the  additional  fact  that  foreign  investors  are  by  the 
contract  given  a  preference  over  American  investors  in  the  purchase  of  any 
bonds  which  may  be  issued  1)efore  next  October,  and  are  also  given  a  pref- 
erence now  over  the  American  investors  who  but  a  short  time  ago  stood 
ready  to  purchase  more  bonds  than  were  then  offered. 

WILLIAM  J.  BRYAN. 
JCJSTIN  R.  "WHITING. 

Mr.  McMiLLiN  and  Mr.  Wheeler  of  Alabama,  while  dissenting  from  the 
majority  of  the  committee,  reserve  an  expression  of  their  views  until  they 
have  an  opportunity  to  present  them  more  at  length  upon  the  floor  of  the 
House. 
1859 


THE  REFORM  OF  THE  CURRi:::. 


SPEECH 


OF 


Hon.  ASHER  G.  CARUTH, 


OF    KENTUCKY, 


HOUSE  OF  REPRESENTATIVES, 


TRIDAY,  JANUARY   4,  1895. 


WASHINGTON. 
I»y5. 


SPEECH 

HON.    A.    G.    CARUTH. 


Tlie  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
haviiifr  under  consideration  tlie  bill  (H.  R.  8149)  to  amend  the  laws  relating  to 
national  banking  asssoi-iations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes — 

Mr.  CARUTH  said: 

Mr.  Chaiuman:  Miuch  has  been  said  in  this  debate  by  opponents 
of  this  measure  of  the  apparent  haste  with  which  this  bill  has 
been  prepared  and  brought  into  the  House.  Gentlemen  seem 
to  desire  to  have  it  appear  that  this  is  a  new  measure  formu- 
lated since  the  assemblage  of  this  Congress  in  thist  session, 
and  they  wash  the  country  to  believe  that  it  was  brought  into 
this  body  an  "ill-shaped  and  ill-formed " bill,  lacking  both  study 
and  care  in  its  preparation.  I  am  surprised  to  hear  this  argument 
Berioiisly  advanced  by  members  of  the  Committee  on  Banking  and 
Currency,  like  my  friends,  the  gentleman  from  Massachusetts  [Mi-. 
Walker],  the  gentleman  fi-om  Indiana  [Mr.  Johnson],  and  the 
gentleman  from  Connecticut  [Mr.  Russell]  .  Each  of  these  gen- 
tlemen is  a  member  of  the  Committee  on  Banking  and  Currency. 
Now,  the  rules  of  the  House  make  it  the  duty  of  that  committee  to 
take  charge  of  all  matters  pertaining  to  the  banking  interests  of 
the  country  and  to  the  bank  issues.  It  is  the  duty  of  its  mem- 
bers to  study  all  questions  connected  with  banking  and  currency 
and  to  suggest  legislation  which  will  promote  the  interests  of  the 
people  and  preserve  the  credit  of  the  Government.  Under  the 
organization  of  the  House,  owing  to  the  multitude  of  matters  of 
legislation  presented  to  the  consideration  of  the  members  of  the 
body,  it  can  not  be  supposed  that  each  individual  representative 
can  keep  fully  informed  upon  all  subjects  which  demand  consid- 
eration by  the  lawmaking  power;  but  members  must  be  guided 
2  1732 


in  their  action  to  a  great  extent  by  the  reports  of  the  committees 
having  the  various  subjects  of  legislation  in  charge. 

The  Committee  on  Banking  and  Currency  was  appointed  at  the 
extra  session  of, the  Fifty-third  Congress,  in  Aut^ust,  1893,  and 
should  have  been  considering  the  subjects  over  which  it  has  juris- 
diction ever  since  that  time.  It  will  not  do  for  meml)ers  of  that 
committee  to  argue  siir prise  in  regard  to  this  measure  or  ignorance 
of  the  wants  and  needs  of  the  country,  for  the  notes  of  warning 
as  to  the  nation's  danger  sounded  in  the  message  of  the  President 
of  the  United  States  were  nottl^e  first  heard  in  this  Capitol.  The 
present  distinguished  Secretary  of  the  Treasury,  he  who  bravely 
took  charge  of  the  finances  of  the  Government  when  the  millions 
which  had  been  accumulated  in  the  Treasury  of  the  United  States 
had  disappeared  and  a  surplus  had  given  place  to  a  deficit,  more 
than  a  year  ago,  in  his  first  report  to  this  Congress,  called  atten- 
tion to  the  condition  of  the  Treasury  and  urged  the  importance  of 
action.  I  quote  from  the  first  report  of  Secretary  Carlisle,  made 
to  this  Congress  in  December,  1893: 

In  the  meantime  it  will  be  the  duty  of  all  who  have  power  to  influence  the 
course  of  events  or  to  assist,  by  legislation  or  otherwise,  in  the  solution  of 
the  grave  quesl^ons  presented  by  the  altered  condition  of  our  monetary  sys- 
tem, to  carefully  consider  the  whole  subject  in  all  its  aspects,  in  order  that 
it  may  be  permanently  disposed  of  by  the  adoption  of  a  simple  and  compre- 
hensive system,  which  will,  as  far  as  possible,  relieve  the  Government  frora 
the  onerous  obligations  now  resting  upon  it,  and  at  the  same  tune  secure  for 
the  use  of  the  people  a  currency  uniform  in  value  and  adequate  in  amount. 

So  since  December,  1893,  reform  of  our  currency  laws  has  been 
directly  a  subject  for  the  consideration  of  the  Committee  on  Bank- 
ing and  Currency;  and  to  say  now  at  this  day  that  it  is  a  new  idea 
is  for  gentlemen  to  confess  their  ignorance  of  the  duties  assigned 
them  under  the  rules  of  this  House.  No  two  men  in  the  nation  are 
as  much  concerned  in  the  proper  administration  of  our  financial 
affairs  as  the  President  of  the  United  States  and  his  Secretary  of 
the  Treasury.  No  one  who  knows  the  men  will  doubt  the  patriot- 
ism, the  honesty  of  purpose  and  integrity  of  Grover  Cleveland  and 
John  G.  Carlisle. 

They  know  that  their  individual  reputation,  their  standing 

amongst  those  who  before  them  have  held  the  high  offices  they 

now  occupy,  their  place  in  our  country's  history,  depend  upon 

the  success  of  their  administration.     Holding  to  the  same  political 
1732 


faith  which  they  profess,  believing  in  the  ultimate  triumph  of  the 
principles  of  public  policy  which  they  entertain,  I  am  not  willing 
to  accept  the  results  of  the  recent  election  as  the  death  of  all  our 
hopes  or  the  blight  of  their  reputation,  for  I  b^ilieve  when  these 
obstructing  clouds  roll  by  there  will  be  a  brighter  and  more  pow- 
erful sun  shining  in  the  heavens.     [Applause.] 

I  believe  when  the  history  of  these  times  comes  to  be  written 
that  it  wiU  be  acknowledged  by  all  that  Grover  Cleveland  was  a 
great  President,  and  that  he  will  take  his  place  in  history  along 
with  the  illustrious  names  which  are  immortal  in  fame;  and  I 
believe  that  John  G.  Carlisle,  even  if  he  does  not  mount  to  a  yet 
higher  position,  as  I  believe  he  will,  will  be  regarded  as  great  a 
Secretary  of  the  Treasury  as  he  was  a  wise,  just,  and  impartial 
Speaker  of  this  House  and  a  learned  and  dignified  Senator  of  the 
Republic. 

Congress  met  and  adjourned  at  its  long  session,  and  althoiigh 
the  danger  to  the  country  was  apparent  no  action  was  taken  to 
afford  the  Treasury  financial  relief.  The  Secretary  was  powerless, 
although  he  directed  the  attention  of  Congi-ess  to  the  situation 
and  called  attention  to  the  needs  of  legislation  in  that  regard.  In 
that  first  report,  from  which  I  have  already  quoted,  he  said: 

So  long  as  the  Government  continues  the  unwise  policy  of  keeping  its  own 
notes  outstanding  to  circulate  as  currency,  and  undertakes  to  provide  for  their 
redemption  in  coin  on  presentation,  it  will  be,  in  my  opinion,  essential  for  the 
Secretary  of  the  Treasury  to  possess  the  means,  or  to  have  the  clear  and  un- 
doubted authority  to  secure  the  means,  which  may  from  time  to  time  become 
necessary  to  enable  him  to  meet  such  emergencies  as  the  one  which  has  re- 
cently occurred  in  our  financial  affairs.  Under  existing  legislation  the  Treas- 
ury Department  exercises  to  a  larger  extent  than  all  the  other  financial  insti- 
tutions of  the  country  combined  the  functions  of  a  bank  of  issue;  and  while 
the  credit  of  the  Government  is  so  strong  that  it  may  not  be  necessary  to 
maintain  at  all  times  the  actual  coin  reserve  which  experience  has  shown  to 
be  requisite  in  the  case  of  ordinary  banking  companies,  still  it  would  be  mani- 
festly imprudent,  to  say  the  least,  not  to  adopt  such  precaiitionary  measures 
as  would  enable  the  Government  in  tunes  of  unusual  monetary  disturbance 
to  keep  its  faith  vrith  the  people  who  hold  its  notes  and  coins  by  protecting 
them  against  the  disastrous  effects  of  an  irredeemable  and  depreciated  cur- 
rency. 

While  the  laws  have  imposed  upon  the  Treasury  Department  all  the  duties 
and  responsibilities  of  a  bank  of  issue,  and  to  a  certain  extent  the  functions 
i)f  a  bank  of  deposit,  they  have  not  conferred  upon  the  Becrotary  any  part  of 
the  discretionary  powers  usually  possessed  by  the  executive  heads  of  institu- 
tions engaged  in  conducting  this  character  of  financial  business.  He  is  bound 
by  mandatory  or  prohibitory  provisions  in  the  statutes  to  do  or  not  do  cer- 
tain things,  without  regard  to  the  circumstances  which  may  exist  at  the  time 
he  is  required  to  act,  and  thus  he  is  allowed  no  opportunity  to  take  advantage 
1732 


of  changes  in  the  situation  favoi'able  to  the  interests  o^  the  Government,  or 
to  protect  its  interests  from  injury  when  threatened  by  adverse  events  or  in- 
fluences. He  can  neither  negotiate  temporary  loans  to  meet  casual  deficien- 
cies nor  retire  and  cancel  the  notes  of  the  Government  without  substituting 
other  currency  for  them  when  the  revenues  are  redundant  or  the  circulation 
excessive,  nor  can  he  resort,  except  to  a  very  limited  extent,  to  any  of  the 
expedients  which  in  his  judgment  may  be  absolutely  necessary  to  prevent 
injurious  disturbances  of  the  financial  situation.  These  considerations  em- 
phasize the  necessity  for  such  legislation  as  will  make  the  Department  more 
independent  of  speculative  interests  and  operations  and  enable  it  to  main- 
tain the  credit  of  the  Government  upon  a  sound  and  secure  basis. 

Congress  having  failed  to  act  on  these  suggestions,  having  failed 
to  either  amend  the  law  enlarging  the  power  of  the  Secretary,  or 
to  provide  some  adequate  means  of  relieving  the  Treasury  of  the 
drain  upon  it,  the  Secretary  of  the  Treasury  has  been  forced 
to  borrow,  within  twelve  months,  $100,000,000  in  two  different 
loans  of  $50,000,000  each;  and  the  President  has  been  com- 
pelled to  proclaim  to  the  country  his  determination  to  sanction 
still  further  the  increase  of  the  bonded  obligations  of  the  Gov- 
ernment until  the  only  power  in  the  nation  which,  under  our 
Constitution,  can  pass  laws. has  provided  measures  of  relief.  Al- 
though more  than  thirteen  months  have  elapsed  since  the  attention 
of  Congress  was  called  to  these  matters,  nothing  has  been  either 
proposed  or  accepted  by  the  lawmakers,  and  in  the  presence  of  a 
deficit  of  nearly  $70,000,000  between  the  receipts  and  expenditures 
of  the  Government  this  Congress  is  again  in  session.  Again  the 
President  has  called  the  attention  of  this  body  to  the  defects  in 
our  monetary  system,  and  again  the  Secretary  of  the  Treasury 
implores  action,  which  must  be  prompt  and  effective  if  the  credit 
of  the  Government  is  to  be  sustained.     He  says: 

In  my  last  annual  report  I  called  attention  to  the  unsatisfactory  condition 
of  our  financial  legislation,  and  especially  to  the  issue  and  redemption  of 
circulating  notes  by  the  Government,  and  the  inability  of  the  Secretary  of 
the  Ti'easury,  under  existing  laws,  to  make  prompt  and  adequate  provision 
for  the  support  of  the  public  credit.  The  experience  of  the  past  year  has 
confirmed  and  strengthened  the  opinions  then  expressed,  and  I  therefore  re- 
spectfully but  most  earnestly  urge  upon  Congress  the  necessity  for  remedial 
legislation  during  its  present  session.  The  well-known  defects  in  our  finan- 
cial system  and  the  serious  nature  of  the  evils  threatened  by  them  have 
done  more  during  the  last  two  years  to  impair  the  credit  of  the  Government 
and  the  people  of  the  United  States,  at  home  and  abroad,  and  to  check  our 
industrial  and  commercial  progress  than  all  other  thmgs  combined,  and  our 
first  and  plainest  duty  is  to  provide,  if  possible,  some  effective  method  for  the 
prompt  and  permanent  i-eliof  of  the  country  from  the  consequences  of  the 
present  unwise  policy. 
1732 


G 

I  do  not  desire  to  reflect  upon  the  Bankinj^  and  Currency  Com- 
mittee, which  is  composed  of  some  of  our  btst,  most  patriotic,  and 
able  members,  but  I  do  say  it  does  not  become  any  member  of 
that  committee  to  complain  that  there  is  uiuhie  haste  in  regard 
to  the  proposed  legislation.  Since  his  entrance  into  the  Cabinet 
of  President  Cleveland,  Mr.  Carlisle  has  given  much  thought  and 
study  to  the  great  subject  of  currency  reform,  and  the  result  of 
that  study  has  been  the  preparation  of  the  pending  bill. 

Now,  some  members  contend  that,  as  Mr.  Carlisle  prei)ared  the 
bill  one  night  and  submitted  it  to  the  committee  the  folloviing 
morning,  that  this  argues  want  of  study  and  consideration  of  this 
great  question.  Doubtless  Mr.  Carlisle  has  revolved  this  matter 
over  in  his  own  mind  hundreds  of  times  when  all  thoughts  of  leg- 
islation Avere  banished  from  the  minds  of  Repi-esentatives.  Doubt- 
less, Mr.  Chairman,  he  considered  this  subject  when  you  and  I 
were  coui-ting  the  sweet  rej^ose  of  sleep,  or  when  we  were  divert- 
ing oui"  minds  Avith  thoughts  far  different  from  those  which  oc- 
cupy them  to-day.  For  on  the  St'cretarj'  of  the  Treasiu-y  rests  the 
important  matter  of  the  care  of  the  finances,  and  the  maintenance 
of  the  credit  of  the  greatest  Republic  in  the  world;  and  the  act  of 
dictating  to  his  secretary  the  words  of  the  proposed  bill  was  the 
least  of  all  the  work  done  in  its  preparation. 

Members  do  not  stop  to  think  that  it  is  our  business  to  make  the 
laws,  not  the  duty  of  the  Secretary  of  the  Treasury,  and  he  is  too 
modest  a  man — for  his  greatness  is  unimjjaired  by  egotism — to 
presume  to  dictate  to  the  lawmaking  power.  He  is  ready  at  all 
times  to  advise,  eager  to  aid  when  asked,  but  never  willing  to 
obtrude.  At  the  request  of  the  committee  he  has  prepared  this 
bill  which  is  now  submitted  to  the  House.  That  was  the  bill  in 
his  mind  which  before  that  he  had  outlined  to  the  President  of 
the  United  States  and  which  is  so  emphatically  indorsed  by  Mr. 
Cleveland  in  his  message.  Mr.  Carlisle  did  not  contend,  nor  does 
anyone  contend,  that  this  is  a  perfect  measure  of  reform  or  that 
it  will  accomplish  all  that  could  be  desired  in  the  way  of  relief  to 
the  country  and  to  the  Treasury. 

In  drawing  the  bill  there  were  several  objects  in  view;  first,  to 
give  the  country  a  safe  and  elastic  bank  currency;  second,  to  re- 
lieve the  Treasury  from  the  constant  drain  on  the  gold  reserve, 
173:; 


and  third,  to  give  the  States  which  desired  it,  a  State  bank  issne. 
That  there  was  a  necessity  for  a  change  in  the  national  banking 
law  was  not  only  demonstrated  by  the  experiences  during  the 
panic  of  1803,  but  is  admitted  by  all  who  have  watched  the  work- 
ings of  the  law  and  whose  business  connected  them  with  theba7ik- 
ing  system  under  it.  A  convention  of  bankers  in  Baltimore,  rep- 
resenting 1,700  national  banks,  of  which  convention  the  gentleman 
who  has  so  recently  taken  his  seat  [Mr,  Hendrix]  was  a  member, 
formulated  a  plan  and  desired  the  national  banking  system  to  be 
changed  to  conform  to  their  ideas.  They  were  looking  at  it  purely 
from  a  business  standijoint,  and  were  considering  their  own  in- 
terests in  the  premises,  and  frankly  so  stated,  when  interrogated  by 
the  gentleman  from  Massachusetts  [Mr.  Wat^ker]  when  their 
representatives  appeared  before  the  Committee  on  Banking  and 
Currency. 

I  agree  with  the  gentleman  from  Massachusetts  in  the  remark 
that  their  plan  is  not  worthy  of  consideration  now,  because  they 
treated  the  subject  from  the  bankers'  standpoint,  and  did  not  place 
themselves  in  the  position  of  the  Secretaiy  of  the  Treasiiry  or  the 
people.  Theirs  was  purely  a  selfish  proposition,  and  you  know, 
gentlemen  of  the  House,  that  it  is  believed  all  over  the  country  by 
all  thinking  men  that  the  most  soulless  people  in  all  the  world  are 
the  bankers.  Donn  Piatt,  I  believe,  gives  this  as  the  bankers' 
prayer: 

Teach  me  a  counterfeit  to  know, 
And  bargains  good  to  see; 

For  quarters  I  to  others  show 
Show  fifty  cents  to  me. 

[Laughter.] 

I  do  not  believe,  however,  that  any  banker  ever  wrote  that 

prayer,  because  1  do  not  believe  that  any  banker  ever  read,  in  a 

proper  spirit,  the  original  of  which  it  is  a  parody.     [Laughter.] 

The  original  of  that  poem,  says: 

That  mercy  I  to  others  show 
That  mercy  show  to  me. 
[Laughter.] 

But  the  gentleman  who  has  just  taken  his  seat  was  a  member 
of  that  convention,  and  the  plan  that  was  then  proposed  was  not, 
as  he  stated  here,  to  base  a  bank  issue  upon  a  deposit  of  govern- 
ment bonds,  but  to  remove  the  security  of  the  government  bt)nds 
1733 


8 

and  to  allow  the  issue  to  be  made  upon  the  unimpaired  capital  of 
the  bank,  and  to  place  back  of  it  not  the  liability  of  the  institution 
that  had  made  the  issue,  but  of  the  Goveniinent  of  the  United 
States. 

Mr.  SPRINGER.  Will  the  gentleman  allow  me  to  suggest  also 
that  that  convention  made  no  proposition  whatever  in  regard  to 
retiring  the  greenbacks,  or  funding  them  into  bonds,  which  my 
friend  from  New  York  (Mr.  Hendrix]  has  emphasized  so  much? 

Mr.  CARUTH.  Not  at  all.  They  did  not  i)lace  themselves,  as 
I  have  said,  in  the  position  of  the  Secretary  of  the  Treasury,  or  of 
the  people.  Their  only  object  seemed  to  be  to  so  arrange  the  law 
as  to  make  it  profitable  to  the  national  banks  to  issue  notes,  and 
impose  upon  the  Government  the  duty  of  final  redemption.  The 
end  in  view  ^vith  lis  as  legislators  is  to  pass  laws,  not  for  the  bene- 
fit of  bankers  alone,  but  for  the  good  of  the  whole  people;  and  to 
do  this  we  must  not  only  provide  a  safe  and  stable  currency,  but 
also  protect  the  Govermnent  by  measures  which  will  maintain  a 
sufficient  reserve  in  gold  to  meet  the  demands  of  the  holders  of 
Government  obligations. 

It  is  stated  by  the  Secretary  of  the  Treasury,  it  is  demonstrated 
by  experience,  that  the  .§.34(),000,0()0  of  greenbacks  and  the  $152,- 
000,000  of  Treasury  notes  issued  for  the  purchase  of  silver  buDion 
under  the  Sherman  Act  are  used  to  reduce  the  gold  in  the  Treas- 
ury and  to  coerce  the  issue  of  bonds. 

This  policy  has  forced  an  addition  of  $1 00.000, 000  to  the  bonded  in- 
terest-bearing debt  of  the  Govermnent  within  the  last  year;  and 
there  is  no  telling  to  what  extent  the  United  States  will  be  com- 
pelled to  go  in  this  matter  unless  this  Congress  enacts  some  reme- 
dial legislation.  In  the  plan  now  before  this  House  is  suggested 
to  Congress  amendments  to  the  national  banking  law,  the  two 
objects  being  to  give  a  safe,  elastic  currency  and  at  the  same  time 
stop  the  drain  on  the  public  Treasury.  If  this  bill  by  its  provisions 
accomplishes  these  two  desirable  purposes,  ougtit  it  not,  gentlemen, 
to  pass  both  Houses  of  Congress  and  become  the  law  of  the  land? 
I  have  read  with  great  interest  the  statements  of  the  bankers  and 
of  the  students  of  finance  before  the  Committee  on  Banking  and 
Currency,  and  find  that  all  admit  that  the  provisions  of  the  bUl 

will  give  a  safe  currency;  that  there  is  no  danger  of  loss  to  the 
1732 


9 

note  holder,  and  that  in  reality  the  security  is  much  greater  than 
is  necessary.  In  this  all  the  witnesses  before  the  committee  agree. 
Nor  is  it  denied  that  this  measure  will  provide  elasticity  in  the 
currency. 

I  can  not,  within  the  time  at  my  disposal,  review  the  provisions 
of  the  bill  which  will  bring  about  these  desirable  results;  but  there 
is  no  question  that  this  bill  will  accomplish  the  purposes  in  view. 
Many  matters  of  doubt  have  been  removed  by  the  provisions  of 
the  substitute  which  will  be  offered  by  the  chairman  of  the  com- 
mittee, and  many  objectionb  to  the  details  of  the  measure,  as  orig- 
inally reported  have  also  been  met  in  the  perfected  bill,  such  as 
removing  the  ultimate  liability  for  the  notes  of  the  failed  banks 
by  all  the  organizations  of  the  system  and  the  removal  of  the 
mandatory  requirement  that  existed  in  the  original  bill  requiring 
national  banks,  on  the  1st  of  July  next,  to  enter  under  the  new 
system.  The  substitute  leaves  this  optional  with  the  banking  con- 
cerns. As  now  perfected,  the  bill  gives  the  banks  the  right  to 
issue  up  to  75  per  cent  of  their  unimpaired  capital,  by  a  deposit  of 
30  per  cent  of  its  circulation  in  greenbacks  or  legal-tender  notes, 
instead  of  requiring  a  deposit  of  Grovernment  bonds,  and  giving  a 
circulation  of  90  per  cent  of  the  par  value  of  the  deposited  Grovern- 
ment obligations.  It  reduces  the  tax  to  one-half  of  1  per  cent, 
payable  semiannually,,  and  provides  a  way  of  raising  additional 
notes  by  removing  the  limitation  of  the  act  of  July  12,  1882. 

To  this  extent  it  helps  the  banks;  but  in  so  doing  it  helps  the 
people  by  giving  a  larger  and  a  more  elastic  volume  of  ciirrency. 
It  gives  ample  security  to  the  note  holder,  and  there  is  no  danger 
of  the  loss  of  a  single  dollar.  Experience  demonstrates  that  the 
security  is  far  beyond  the  demand  of  safety,  and  the  testimony  of 
the  bank  experts  who  have  been  heard  by  the  committee  bears 
this  out.  There  is,  therefore^  so  far  as  national  banks  them- 
selves are  concerned,  or  the  holders  of  the  notes  they  issue,  no 
danger  of  there  being  any  alarm  created  in  the  public  mind  by 
the  passage  of  this  bill.  Grood,  and  not  evil,  will  result.  So  far 
as  the  State  bank  issues  are  concerned  there  need  be  no  fear. 

We  told  the  people  in  1893  that  if  placed  in  power  the  Demo- 
cratic party  would  repeal  the  obstruction  in  the  way  of  the  issue 
of  notes  by  banks  incorporated  under  State  laws.  In  this  bill  we 
1733 — 3 


10 

propose  to  cany  out  the  pledge,  ami  to  do  it  in  such  a  manner  as 
will  protect  the  pockets  of  the  people  from  loss.  Gentlemen  pro- 
fess to  fear  return  to  the  "  wild-cat "  or  "  red-dog  "  notes  of  ante- 
belliTm  times.  There  is  no  danger  of  this.  On  this  point  I  might 
simply  multiply  evidence  indefinitely,  but  will  content  myself 
with  an  extract  fi'om  the  testimony  of  Secretary  Carlisle.  He 
said: 

But  I  do  not  believe  that  yoti  can  reestablisli  what  was  called  the  wild-cat 
banlring  system  in  the  United  States  any  more  than  you  can  I'eestablish  the 
conditions  out  of  which  the  system  arose.  Those  conditions  have  all  passed 
away,  and  you  can  not  have  a  bank  of  issue  that  could  sustain  itself  unless 
its  notes  are  safe  or  reasonably  safe.  The  education  and  the  experience  of 
the  people  of  the  United  States  for  the  last  thirty  years  have  carried  them 
a  lonji  way  beyond  the  point  of  keeping  in  circulation  any  depreciated  bank 
paper. 

Hence  I  fear  no  danger  from  State  banks  which  issue  notes  un- 
der this  bill — free  to  operate  if  they  obey  the  law,  doomed  to  de- 
struction if  they  disobey  its  mandates.  The  provisions  of  the  bill 
would  lead  to  the  enactment  of  State  laws  requiring  vigilant  su- 
pervision by  State  officials  in  addition  to  that  scrutiny  to  which 
the  banking  concerns  chartered  by  the  States  would  be  subjected 
by  the  Federal  authorities.  But  over  and  beyond  all  is  the  ques- 
tion whether  the  pending  measure  will  relieve  the  Treasury  from 
the  dangerous  condition  in  which  it  was  found  by  Mr.  Carlisle 
when  he  took  charge  of  its  affairs,  and  which,  from  the  then  ex- 
isting causes,  not  from  any  fault  of  the  party  in  power,  has  grown 
worse  and  more  alarming  witli  each  passing  month.  There  are, 
as  has  been  so  often  stated  in  this  debate,  nearly  $500,000,000  of 
our  obligations  outstanding  which  on  presentation  at  the  Treasury 
miTst  be  redeemed  in  gold  if  we  would  sustain  our  credit  as  a  Gov- 
ernment, and  no  sooner  are  they  redeemed  than  they  are  required 
of  necessity  to  be  reissued. 

Had  we  not  at  the  extra  session  of  this  Congress  repealed  the 
purchasing  clause  of  the  Sherman  Act  our  Treasury  difficulties 
would  have  almost  overwhelmed  us  and  brought  discredit  to  the 
nation.  Hence  1  am  astonished  to  hear  gentlemen  on  this  floor, 
men  whose  ability  and  statesmanship  I  have  admired,  congratu- 
late themselves  that  they  did  not  favor  the  repeal  of  this  obnoxious 
law.     The  great  question  is,  how  shall  we  stop  the  flow  of  gold 

out  of  the  Treasury  and  oiit  of  the  country?    Mr.  Richard  P. 
173;} 


11 

Rotliwell,  one  of  the  witnesses  Lefore  the  Committee  on  Banking 
and  Currency,  gave  the  figures  setting  out  the  situation,  as  fol- 
lows: 

As  the  Sherman  Act  inspired  apprehensions  as  to  our  ability  to  maintain 
gold  payments,  the  effect  was  to  encourage  exports  of  gold. 

NET  EXPORTS  OE  GOLD. 

Years  ending  June  30 — 

1891 _ 168,130,087 

1892. 495,873 

1893 87,506,463 

156,133,423 
Sherman  Act  notes  outstanding  June  30, 1893 146, 341 ,  ;386 

It  will  be  noticed  that  the  country's  loss  in  gold  was  siibstantially  the 
amount  of  the  issues  under  the  Sherman  law. 

That  bill  was  "  a  political  makeshift."  We  so  denounced  it  in 
our  platform  and  demanded  its  repeal,  and  it  ill  becomes  Demo- 
crats who  arraign  our  party  for  alleged  violation  of  party  pledges 
to  raise  their  hands  to  high  Heaven  and  thank  their  Maker  that 
they  did  not  vote  to  carry  out  this  promise,  as  solemnly  made  to 
the  country  as  any  contained  in  the  resolutions  of  the  Denio- 
ratic  National  Convention. 

But,  Mr.  Chairman,  the  pending  measure  will  at  least  lock  up 
from  circulation,  of  these  dangerous  legal-tender  and  Sherman 
notes,  30  per  cent  of  the  amount  of  the  circulation  of  the  national 
banks  and  30  per  cent  of  the  amount  of  the  circulation  of  the  State 
banks  operating  under  the  provisions  of  this  law.  Whilst  this 
bill  vnll  not  give  entire,  it  will  give  partial  relief,  and  under  the 
discretion  given  the  Secretary  of  the  Treasury  to  retire  the  notes 
out  of  the  surplus  revenue  these  greenbacks  and  Sherman  notes 
may  finally  be  eliminated,  retired,  and  destroyed,  as  all  admit  they 
should  be. 

Mr.  McMILLIN.  If  it  will  not  interrupt  my  friend  from  Ken- 
tucky, I  would  like  to  know  what  it  is  proposed  to  bank  on  wlieu 
they  are  destroyed.  They  are  the  basis  of  this  currency,  and  it 
seems  to  me  that  to  authorize  their  destruction  is  to  authorize  the 
destruction  of  the  very  system  we  propose  to  enter  upon. 

Mr.  CARUTH.  That  is  provided  for  in  the  bill,  so  as  to  leave 
sufficient  basis  for  the  circulation.  Certainly  you  can  not  retii'e 
the  30  per  cent  that  is  i)ut  up  for  Ininking  purposes. 

1733 


12 

Mr.  MfMILLIN.  You  could  if  auy  hank  wishing  to  surrender 
its  charter  saw  fit  to  go  and  present  them. 

Mr.  CARUTH.  The  provision  in  the  bill  is  that  the  amoTint 
shall  not  exceed  70  per  cent.  I  will  ask  the  chairman  of  the  Com- 
mittee on  Banking  and  Currency  if  that  is  not  so? 

Mr.  SPRINGER.  Yes:  that  is  to  say,  the  net  increase  under 
the  new  law. 

Mr.  McMILLIN  (to  Mr.  Springer).  What  is  the  greatest 
amount  that  could  be  destroyed  under  your  bill? 

Mr.  SPRINGER.  If  no  new  banks  are  established  and  the  capi- 
tal stock  of  none  is  increased,  the  State  banks  and  the  national 
banks,  having  together  an  aggregated  capitalization  of  a  thousand 
millions,  could  take  out  only  ^TilO.OOO.OOO,  and  30  per  cent  of  that 
would  be  $225,000,000,  which  would  be  the  aggregate  amount  that 
could  be  retired  under  the  total  capitalization  of  all  the  banks. 

Mr.  McMILLIN.  While  we  are  on  that  subject,  inasmuch  as 
you  authorize  the  continuance  of  banking  on  the  bonds,  if  existing 
banks  should  continue  on  the  bonds,  then  there  coiild  be  a  total 
destriiction  of  the  other  circl^lation. 

Mr.  CARUTH.  If  all  of  the  banks  continued  on  the  bond  basis, 
that  would  be  true;  but  we  are  offering  in  this  bill  great  induce- 
ments for  the  national  banks  to  organize  under  this  system,  and 
to  abandon  the  old  one. 

Mr.  LACEY.  I  understand  the  gentleman  from  Kentucky  to 
claim  that  the  issuance  of  what  were  called  the  Sherman  notes  re- 
sulted in  the  driving  of  an  equivalent  amount  of  gold  from  the 
country. 

Mr.  CARUTH.     That  is  the  testimony. 

Mr.  LACEY.  Now,  on  what  basis  do  you  claim,  or  do  you 
claim  at  all,  that  the  issuance  of  additional  bank  currency  will  not 
operate  in  the  same  way? 

Mr.  CARUTH.  I  want  to  relieve  the  Treasury.  I  am  not  car- 
ing whether  gold  goes  out  of  the  country  or  not,  provided  there  is 
enoiigh  left  to  meet  the  obligations  of  the  Government  and  the 
needs  of  the  people. 

Mr.  SPRINGER.     The  bank  currency  will  be  redeemed  by  the 
banks,  while  the  Sherman  notes  have  to  be  redeemed  by  the  Gov- 
ernment of  the  United  States. 
I7:j:i 


13 

Mr.  LACE Y,  So  the  gentleman  from  Kentucky  thinks  that  an 
equal  amount  of  gold  will  be  displaced  and  sent  abroad. 

Mr.  CARUTH.     No;  I  do  not  think  so. 

Mr.  SPRINGER.  Not  by  this  bill.  There  will  be  a  demand 
for  it  in  this  country. 

Mr.  CARUTH.  Now,  Mr.  Chairman,  it  is  easier  to  criticise 
than  it  is  to  create.  It  is  easier  to  pull  down  than  it  is  to  build 
up.  It  takes  an  architect  to  plan  a  beautiful  structure,  and  it 
takes  a  skilled  and  experienced  artisan  to  erect  the  building  ac- 
cording to  the  plan,  but  an  untutored  hod  carrier,  an  ignorant  la- 
borer, can  pull  it  down,  brick  from  brick,  and  raze  it  to  the  ground. 
I  have  thought  of  this  during  the  discussion  of  the  pending  meas- 
ure. Many  gentlemen  have  criticised  it.  Many  have  f oimd  fault 
with  its  various  provisions,  but  no  one  has  produced  a  better  bill. 
Some  say  that  while  they  admit  the  condition  of  the  Treasury  and 
deplore  the  situation  of  the  country,  they  will  not  vote  for  any 
measure  which  does  not  carry  out  their  own  peculiar  views.  They 
want  free  silver  or  they  will  not  take  anything.  They  know  they 
can  not  get  this,  but  they  do  not  know  that  even  if  they  had  it  it 
would  relieve  the  difficulties  of  the  Treasury. 

Men  say  that  this  measure  is  purely  experimental.  So  would 
that  measure  be;  it  would  be  purely  experimental.  I  recollect, 
Mr.  Chairman,  to  have  heard  one  of  the  most  distinguished  edi- 
tors and  most  eloquent  orators  of  this  country  say  when  discussing 
the  silver  question  that  he  had  for  thirty  years  been  a  writer  and 
speaker  upon  economic  and  financial  questions,  and  that  it  was 
his  business  as  such  a  writer  and  speaker  to  be  familiar  with  all 
matters  regarding  the  finances  of  the  country,  and  he  said:  "Now, 
at  the  end  of  that  time,  I  am  willing  to  make  a  confession  that  I 
know  nothing  whatever  about  the  silver  question,  and  never  in 
all  my  life  knew  but  four  men  who  did. "  [Laughter.  ]  "Of  those 
four  men,  two  are  dead,  and  the  other  two  ne\  er  had  a  dollar  in 
their  lives."     [Laiighter.] 

But  these  advocates  of  this  idea  are  willing  to  defeat  all  finan- 
cial legislation  at  this  session  rather  than  surrender  their  pet 
views.  They  would  let  this  Congress  die  on  the  4th  of  March 
next  and  be  succeeded  by  a  Republican  Congress.  They  would 
let  that  Congress  wrestle  with  the  great  financial  problem,  solve 
1732 


14 

it  ill  some  manner,  and  Teeeive  credit  for  so  doing.  It  is  not  so 
mncli  opposition  to  this  bill  that  inspires  j^entlemen  on  the  other 
side  (jf  this  House  m  their  fight  as  the  fear  lest  the  Democratic 
party  will  be  equal  to  the  emergency  and  enact  this  measure  into 
law. 

Why,  Mr.  Chairman,  the  gi-eat  difficulty  with  the  Democratic 
party  is  not  want  of  ability;  it  has  a  superbnndance  of  ability 
It  is  not  want  of  leadership;  it  has  too  many  leaders.  It  is  not 
the  need  of  a  general;  there  are  too  many  generals  and  no  privates 
in  the  Democi'atic  ranks.  [Laughter.]  I  hope  now,  however, 
when  we  are  about  to  surrender  control  of  the  legislative  body  of  • 
the  nation  to  our  successful  opponents,  we  will  lay  aside  our 
pride  of  opinion,  and  although  it  may  not  carry  out  our  particular 
views  or  be  in  accordance  Avith  our  individual  ideas — although  it 
may  not  be  the  offspring  of  our  brains,  let  us  unite  in  support  of 
a  measure  of  relief  for  a  distressed  country  and  a  suffering  people. 

I  had  hoped,  Mr.  Chairman,  at  the  outset  that  this  matter  might 
have  been  handled  in  a  spirit  of  patriotism,  without  the  bias  of 
partisanship.  But  if  gentlemen  on  the  other  side  of  the  House 
wish  to  place  the  entire  responsibility  on  the  party  in  power,  I  ac- 
cept the  issue  and  believe  the  passage  of  the  pending  bill  will 
redound  to  the  interests  of  the  political  organization  to  which  I 
belong.  With  the  passage  of  this  measure  we  can  submit  the 
work  of  this  body  to  the  people  of  this  country.  We  can  point  to 
the  ballot  box  rescued  from  the  interference  of  Federal  authority. 
We  can  show  reduced  expenditures  of  the  people's  money.  We 
have  given  the  country  tariff  reform;  and  if  we  pass  this  measure 
we  will  give  it  honest  money.  The  people  will  do  us  justice. 
Each  passing  day  will  add  to  our  party's  strength;  and  before 
many  months  have  fled  into  the  past  we  shall  find  the — 

Winter  of  our  discontent 
Madp  gU)rious  summer;    *    *    * 
And  all  the  clouds,  thiit  lowered  about  otii-  house, 
In  the  deep  bosom  of  the  ocean  buried. 

[Applause.] 

1733 


UPON  THE  REFORM  OF  THE  CUR  ND 

RELIEF  OF  THE  TREASU 


SPEECH 


OF 


HOK  T.  C.  CATCHINGS, 


OF    MISSISSIPPI. 


HOUSE   OF   EEPRESE^TATIVES, 


Saturday,  January  5, 1895 


WASHINGTON. 

181)5. 


SPEECH 

OF 

HON.    T.    C.    CATCHINGS. 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8U9)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes- 
Mr.  CATCHINGS  said: 

Mr.  Chairman:  We  are  told  that  when  David  Copperfield  was 
born  he  was  found  to  have  a  caul  over  his  face.  It  was  a  belief 
in  those  days  that  to  own  a  caul  was  a  protection  against  death 
by  drowning.  About  ten  years  afterwards,  it  being  regarded  as 
an  article  of  value,  David's  caul  was  put  up  in  a  raffle  and  won 
by  an  old  lady,  who  died  triumphantly  in  bed  at  the  age  of  93 
with  out  having  been  drowned.  She  had  a  great  dislike  of  water, 
and  frequently  expressed  her  indignation  at  the  impiety  of  mari- 
ners and  others  who  had  the  presumption  to  go  "meandering 
about  the  world."  When  it  was  represented  to  her  that  great  con- 
veniences sometimes  resulted  from  this  practice  of  theirs,  she 
would  testily  reply:  "Let  us  have  no  meandering." 

I  shall  not  roam,  Mr.  Chairman,  in  the  domains  of  philosophy, 
as  my  friend  the  gentleman  from  New  York  [Mr.  Cockran]  has 
done;  but  I  can  offer  the  committee  something  in  the  way  of  com- 
pensation by  the  assurance  that  I  shall  speak  to  my  text  and  have 
"no  meandering." 

I  do  not  mean  to  be  unkind  when  I  say,  Mr.  Chairman,  that  my 
friend  from  New  York  would  have  left  a  far  better  impression 
upon  the  House  if  he  had  stopped  his  speech  when  he  stopped  his 
"meandering,"  for  so  soon  as  he  actually  began  the  discussion  of 
the  question  before  us  it  was  discovered  that  he  had  nothing  what- 
ever to  suggest  of  interest  to  the  Treasury,  whose  condition,  as 
we  all  agree,  presents  now  the  most  serious  aspect  of  the  problem 
before  us. 

The  gentleman  said  he  would  joyously  support  the  Baltimore 
plan,  and  yet  he  confessed  that  the  framers  of  that  plan  never  in- 
tended that  it  should  have  any  effect  whatever  upon  Treasury  con- 
ditions. I  suppose  that  we  may  take  as  the  upshot  of  all  his  long 
discourse  that  he  would  have  the  Baltimore  plan,  and  then,  to  use 
his  expression,  he  would  turn  his  back  upon  the  Treasury,  as  if 
the  Treasury  of  itself,  without  the  steering  hand  of  legislation, 
could  take  care  of  itself.  My  friend  discoursed  at  great  length 
upon  the  evils  of  Government  paper  issues,  and  in  much  that  he 
said  in  that  connection  I  am  in  hearty  accord  with  him.  And  yet 
1743  3 


we  find  that  he  is  willing  joyously  to  support  the  Baltimore  plan, 
whose  only  effect,  so  far  as  the  CTOverniiient  is  concerned,  would 
be  to  increase  the  obligations  of  the  Government  by  something  like 
$200,000,000.  Because  you  may  be  sure  that  the  national  banks 
under  the  Baltimore  plan  would  all  take  out  the  50  per  cent  of  cir- 
culating notes  allowed  by  it,  and  instead  of  having,  as  now,  about 
$175,000,000  of  these  notes  outstanding,  we  should  have  more  than 
$350,000,000. 

And  these  notes,  Mr.  Chairman,  being  Government  obligations — 
for  the  Baltimore  plan  expressly  declares  that  the  Government 
shall  be  under  obligation  to  redeem  them  upon  presentation — would 
also  all  have  to  be  paid  in  gold,  as  is  the  case  with  all  of  our  legal 
tenders.  So  that  the  upshot  of  his  whole  proi)osition  is  to  add 
greatly  to  the  burdens  under  which  the  Treasury  is  now  strug- 
gling, without  providing  a  single  atom  of  relief.  I  think,  there- 
fore, that  I  am  justified  in  stating.  Mr.  Chairman,  that  the  gen- 
tleman would  have  done  better  for  his  o\\ni  reputation  if  he  had 
not  broached  this  subject  at  all,  and  had  stopped  about  fifteen 
minutes  before  he  did,  at  the  conclusion  of  his  "meandering." 

Mr.  Chairman,  the  bill  which  we  are  considering  has  several 
purposes  Avhich  it  seeks  to  accomplish.  One  of  these  is  to  provide 
the  people  of  this  country  with  a  more  abundant  and  more  useful 
and  more  expansive  currency. 

Another  is  to  relieve  the  Treasury  as  far  as  practicable,  under 
existing  conditions,  from  the  necessity  of  maintaining  the  cur- 
rent redemption  of  so  large  an  amount  of  paper  money;  and  still 
another  is  to  supply  a  field  in  which  our  silver  money  maj'  most 
profitably  and  usefully  be  engaged.  It  is  therefore  seen  that  the 
gentleman  from  New  York  scarcely  touches  the  legislation  pro- 
posed in  anything  said  l)y  him.  His  speech,  so  far  as  practical  re- 
sults are  concerned,  is  absolutely  barren.    Absolutely  so. 

I  have  manj^  times  said,  Mr.  Chairman,  that  the  foundation  of 
all  the  financial  heresies  which  have  taken  root  in  this  country  and 
have  so  confused  many  of  our  people  is  to  be  found  in  the  un- 
fortunate, and.  I  think,  wholly  unjiastified,  decision  of  the  Su- 
preme Court,  that  this  Government  has  the  power  to  issue  paper 
money  and  make  it  legal  tender  in  the  payment  of  debts. 

Mr.  WALKER.     That  is  so. 

Mr.  CATCHINGS.  If  any  man  prior  to  1861 ,  of  any  party,  had 
suggested  that  the  Government  possessed  such  power  he  would 
have  been  derided  as  a  tit  subject  for  the  lunatic  asylum. 

The  legal-tender  issues  and  the  decision  sustaining  them  yet  re- 
main with  us  as  one  of  the  evils  of  the  war.  There  was  pressure 
put  upon  the  court  to  maintain  what  was  confessedly  a  war  meas- 
ure, and,  unfortunately  for  the  good  of  the  country,  the  court 
yielded  to  that  popular  influence.  When  these  greenbacks  were 
issued,  Mr.  Chairman,  it  was  done  almost  apologetically.  Nothing 
but  the  great  stress  which  was  then  upon  the  people  of  this  country 
to  equip  and  maintain  armies  -with  which  to  prosecute  a  great  civil 
war  could  have  induced  the  Congi-ess  of  the  United  States  to  pass 
such  a  measure.  It  was  asserted,  pending  its  consideration,  that 
it  was  meant  to  be  purely  temporary,  and  that  when  hostilities 
had  ceased  and  normal  conditions  had  been  restored  the  first  step 
the  Government  would  take  would  be  to  redeem  and  cancel  these 
promises  to  pay. 
1743 


In  1875,  for  the  purpose  of  making  good  that  promise,  it  was  pro- 
vided by  the  resumption  act  that  the  Secretary  of  the  Treasury 
should  proceed  to  carry  that  pledge  into  effect  by  the  redein])tion 
and  cancellation  of  the  greenbacks.  No  man  can  compute  the  cost 
which  has  come  to  the  American  people  through  the  absurd  vaga- 
ries, the  crude  financial  heresies,  and,  latterly,  the  loss  and  dis- 
turbance of  credit,  as  a  result  of  the  prohibition  against  their 
cancellation  contained  in  the  subsequent  act  of  1878.  The  Treas- 
ury of  the  United  States  has  no  control  whatever,  and  can  not 
have  in  the  nature  of  things,  of  its  revenues,  either  when  you  con- 
sider their  quality  or  their  quantity.  It  must  receive  what  is  paid 
to  it;  and  as  these  obligations  are  to  be  redeemed  in  gold  when 
presented,  whenever  conditions  are  such  that  the  Treasury  is  not 
receiving  the  gold  with  which  to  redeem  them,  then  we  have  got 
to  the  point  when  we  must  let  our  notes  go  unpaid,  and  suffer  the 
loss  of  credit  that  would  surely  ensue,  or  use  the  only  power  left — 
and  that  is  to  provide  the  gold  by  the  sale  of  bonds. 

It  was  stated  by  the  Secretary  of  the  Treasiiry  in  his  last  report 
that  but  for  the  necessity  of  current  redemption  of  Government  * 
paper  money  there  had  nev^er  been  a  year  when  the  ordinary  rev- 
enues of  the  Treasury  would  not  have  suflQ.ced  to  meet  all  its  obli- 
gations. Within  the  last  twelve  months,  for  the  purpose  of 
maintaining  the  credit  of  this  Government,  you  have  seen  the 
Secretary  of  the  Treasury  sell  $100,000,000  of  bonds,  which  have 
been  added  to  the  debt  of  this  country,  the  interest-bearing  debt; 
and  yet  we  are  practically  where  we  were  before  they  were  sold. 
As  the  matter  stands  now,  so  long  as  these  notes  are  ijresented  for 
redemption  so  long  will  this  necessity  upon  the  Secretary  of  the 
Treasury  exist  of  maintaining  your  credit  and  mine  and  that  of 
the  Government  by  adding  to  our  bonded  indebtedness.  So  that 
really  the  exposed  and  impotent  state  of  the  Treasury  constitutes 
the  most  serious  aspect  of  the  problem  which  confronts  us  to-day. 

But  for  this  condition,  Mr.  Chairman,  as  defective  as  I  think 
our  banking  currency  system  is,  we  might  get  along  with  it  fairly 
well,  as  we  have  done  heretofore.  There  is  no  such  crying  neces- 
sity for  a  reform  of  our  system  of  currency  issues  as  there  is  for 
some  provision  by  which  the  honor  of  the  Government  can  be 
maintained  without  imposing  this  great  burden  upon  the  people 
by  the  constant  sale  of  bonds. 

No  man  can  tell  how  serious  the  effect  must  be  upon  all  biisi- 
ness  and  upon  our  standing  with  the  nations  of  the  earth  of  this 
spectacle  which  we  to-day  present.  It  is  not  the  fact  that  gold 
exportations  are  going  on  or  have  been  going  on  that  has  afflicted 
us.  Ever  since  we  have  been  a  nation,  and  so  long  as  we  shall  be 
a  nation,  under  certain  conditions  of  trade  exports  of  gold  have 
occurred  and  will  occur,  for  it  is  conceded  by  all  political  econo- 
mists that  no  system  will  suffice  to  enable  a  nation  to  retain  per- 
manently more  than  its  just  distributive  share  of  the  gold  in  the 
world.  Gold  is  the  international  medium  of  exchange  through 
which  the  commerce  between  nations  is  transacted. 

If  it  were  not  for  the  needless  strain  imposed  by  our  unwise 
system  upon  the  Treasury  these  gold  exportations  would  go 
on  in  pursuance  of  the  natural  laws  of  commerce  without  exciting 
a  question  or  attracting  the  slightest  attention,  and  let  no  man  bo 
deluded  into  the  belief  that  anything  that  we  may  now  do  or  any- 
1743 


6 

thin;:  that  those  who  come  after  us  may  do  will  ever  prevent  gold 
from  lea\'ing  oiir  shores  when  it  can  boused  more  profitably  in 
otlicr  hinds.  It  goes  where  it  can  find  the  reward  it  demands,  and 
we  maybe  sure  that  if  the  time  shall  come  when  the  conditions  of 
trade  favor  us,  no  matter  how  great  the  quantity  of  gold  that  may 
have  gone  from  lis  in  the  meantime,  it  will  be  swift  and  eager  to 
return  and  seek  eniplojonent  here.  But  as  it  is,  with  our  Treasury 
standing  absolutely  exposed  to  the  assaults  of  all,  the  whole  world 
sees  that  we  have  assumed  obligations  which  we  can  not  in  the 
ordinary  course  of  business  comply  with. 

The  world  knows  to-day  that  we  can  maintain  the  current  re- 
demption of  our  paper  money  only  by  resorting  to  the  process 
which  the  insolvent  or  the  disabled  debtor  resorts  to,  of  extend- 
ing the  time  of  payment  by  executing  a  new  obligation  for  money 
borrowed  with  which  to  satisfy  the  creditor  pressing  for  payment. 
This  condition  of  things  has  been  foreseen  for  a  long  time  by  many 
sagacious  men  as  one  which  might  happen.  So  long  as  the  con- 
ditions were  in  our  favor  and  our  Treasury  was  plethoric,  and  be- 
fore the  great  panic  of  1893  came  upon  us,  all  was  fair  sailing, 
and  these  greenbacks  were  maintained,  so  far  as  we  could  see, 
without  the  slightest  difficulty.  It  was  a  fair-weather  system. 
So  long  as  the  breezes  were  gentle  and  the  sea  smooth  the  ship 
of  state  went  along  in  a  gladsome  way;  but  it  was  unfitted  by 
its  construction  to  buffet  with  the  waves  or  to  resist  the  icy  frosts 
of  wintry  seas. 

Now,  Mr.  Chairman,  is  it  not  important  that  if  we  can  do  so 
we  should  remedy  this  condition  and  rescue  our  Treasury  from 
its  embarrassment? 

And  if  we  can,  at  the  same  time,  remodel  our  banking  laws  so 
that  we  can  have  an  elastic  currency  which  shall  be  able  to  ex- 
pand and  contract,  so  that  it  shall  adapt  itself  to  all  conditions 
and  demands  of  business,  it  is  our  duty  to  do  so.  No  man  can 
tell  how  much  money  is  needed  to  enable  the  people  properly  to 
transact  their  affairs.  The  amount  required  can  only  be  known 
when  business  speaks  and  makes  its  necessities  known.  What  may 
be  sufficient  at  one  time  may  be  wholly  insufficient  at  another. 
We  should  therefore  have  a  system  capable  of  adjusting  itself 
to  the  fluctuating  demands  of  business,  so  that  there  will,  at  all 
times,  be  an  abundance  of  currency  and  no  more.  It  should  pos- 
sess the  power  of  making  this  adjustment  without  the  interven- 
tion of  legislation.  We  have  to-day  a  rigid  and  inflexible  systei' 
which  wholly  fails  to  come  up  to  this  standard,  and  there  can  be 
no  change  in  our  conditions  so  long  as  we  have  nothing  but  legal- 
tender  money,  issued  by  the  Government. 

The  people,  through  well-regulated  banks  operating  under  equal 
and  impartial  laws,  which  shall  prevent  monopoly,  can  make  their 
own  money  better  than  the  Government  can,  and  adjust  the 
amount  of  it  to  their  necessities  as  the  Government  can  not  possi- 
bly do.  Let  us  see  if  the  plan  proposed  by  the  Secretary  of  the 
Treasury  does  not  comprise  all  that  is  required  to  furnish  a  safe, 
sound,  and  abundant  currency.  It  provides  that  national  banks 
may  issue  circulating  notes  to  an  amount  equal  to  75  per  cent  of 
their  paid  up  and  unimpaired  capital,  upon  depositing  with  the 
Treasury  30  ])er  cent  of  the  amount  of  their  notes  in  greenliacks 
or  notes  issued  under  the  Sherman  law.    A  tax  is  imposed  upon 

1743 


the  notes  of  all  banks  until  a  fund  is  created,  to  be  known  as  the 
safety  fund,  equal  to  5  per  cent,  and  as  this  fund  is  reduced  from 
time  to  time  in  redeeming  notes  it  is  to  be  replenished  by  further 
taxation. 

A  tax  of  one-half  of  1  per  cent  per  annum  is  levied  on  all  notes 
each  year  to  cover  the  cost  of  printing  them  and  replacing  them 
when  worn  or  mutilated  and  administering  the  law.  A  first  lien 
is  given  for  the  payment  of  the  notes  on  all  assets  of  the  bank, 
and  stockholders,  as  under  the  present  law,  are  liable  to  an  amount 
equal  to  their  stock. 

The  practical  operation  would  be  this:  If  a  bank  should  organ- 
ize with  a  capital  of  $100,000,  it  could  take  out  $75,000  of  notes. 
Against  this  it  would  deposit  $22,500  in  legal  tenders.  Thus  it 
would  be  able  to  make  a  net  increase  in  its  means  of  serving  the 
people  of  $52,500. 

The  existing  tax  of  10  per  cent  on  notes  of  State  banks  and 
which  has  prevented  them  from  issuing  notes  at  all  is  not  exacted 
as  to  the  notes  of  any  banking  corporation  duly  organized  under 
the  laws  of  any  State,  and  which  transacts  no  other  than  a  bank- 
ing business  when  it  is  shown  to  the  satisfaction  of  the  Secretary 
of  the  Treasury  and  the  Comptroller  of  the  Currency: 

First.  That  such  bank  has  at  no  time  had  outstanding  its  cu-cu- 
lating  notes  in  excess  of  75  per  cent  of  its  paid-up  and  unimpaired 
capital. 

Second.  That  its  stockholders  are  individually  liable  for  the  re- 
demption of  its  circulating  notes  to  an  amount  equal  to  the  par 
value  of  the  stock  owned  by  them. 

Third.  That  the  circulating  notes  constitute  by  law  a  first  lien 
upon  all  the  assets  of  the  bank. 

Fourth.  That  the  bank  has  at  all  times  kept  on  deposit  with  an 
officer  of  the  State,  authorized  by  law  to  receive  and  hold  the  same, 
a  guarantee  fund  in  legal-tender  notes  equal  to  30  per  cent  of  its 
outstanding  circulating  notes. 

Fifth.  That  it  has  promptly  redeemed  its  notes  at  par  on  demand 
at  its  principal  office,  or  at  one  or  more  of  its  branch  offices,  if  it 
has  branches. 

Under  the  plan,  it  will  be  seen  that  State  banks,  upon  the  con- 
ditions named,  may  issue  their  notes  just  as  national  banks  are 
empowered  to  issue  theirs. 

The  following  excerpt  from  the  report  of  the  Committee  on 
Banking  and  Currency  clearly  shows  what  abundant  security 
would  be  afforded  to  the  holders  of  the  notes  of  national  banks 
organized  under  the  plan: 

According  to  the  report  of  the  Comptroller  of  the  Currency  for  the  year 
ending  October  31, 189f,  it  appears  that  there  were  at  the  close  of  that  year  in 
operation  in  the  United  States  3,756  national  banks,  with  an  authorized  capi- 
tal stock  of  $672,671,365.  The  bill  reported  by  your  committee  limits  the 
amount  of  circulating  notes  which  any  bank  may  issue  to  75  per  cent  of  its 
capital  stock.  If,  under  this  bill,  the  national  banks  should  take  out  the  entire 
circulation  to  which  they  would  be  entitled  the  aggregate  of  circulating 
notes  would  be  $504,000,000.  The  5  per  cent  safety  fund  upon  this  circulation 
would  amount  to  $^^5,030,000.  The  guaranty  fund  required  by  the  bill  upon 
this  circulation  would  amount  to  $151,000,000. 

The  resources  of  all  the  banks  at  that  time  amounted  to  $3,473,922,055.  It 
thus  appears  that  upon  a  possible  circulation  of  $.504,000,000  there  would  be  a 
present  available  security  of  $151,(KH),()0iJ  guaranty  and  $i"),(XK),(KK)  of  safety 
funds,  and  an  iiltimate  fund  upon  which  assessments  could  be  made  to  th« 
amount  of  $;3,473,922,055.  During  the  great  financial  crisis  of  1893,  15»  n»tio&»J 
1713 


banks  siisponded  pay  mont,  having  a  capital  stock  of  $:?0,350,0(T0.  If  the  national 
Imnks  in  tuis  United  States  liad  tuk  u  out  the  full  finiouut  of  circulation  to 
which  they  were  entitled  at  that  time,  under  the  proposed  bill,  if  it  had  heen 
in  force  at  tliat  time  iiud  if  the  susp.Mided  hanks  had  taken  out  their  maxi- 
mum circulation,  the  notes  of  such  hanks  would  have  amounted  to  $:i;i,7t):i,()()0. 
Thirty  per  cent  of  that  amount  would  luive  been  secured  by  the  deposit  of 
le^'al-tender  notes.  This  would  have  left  $i;j,y34,(IOO  of  circulating  notes  for 
pa  vment  out  of  the  safety  fund,  which,  as  before  stated,  would  have  amounted 

These  facts  demonstrate  conclusively  that  if  the  proposed  bill  had  been  in 
force  during  the  crisis  of  1893,  if  all  the  banks  had  tu(n-etofore  tak<'u  out  cir- 
culation to  the  maximum  amount  allowed  bylaw,  and  if  the  failed  l)anks  had 
also  taken  out  theii'  maximum  circulation,  the  giiaranty  and  safety  funds 
would  have  been  ample  for  the  payment  of  the  entire  cii-culation  of  tln'  out- 
standing notes,  and  would  have  left  a  surplus  of  over  $11,(KKI,IKHI  still  in  the 
safety  fund  without  the  necessity,  even  in  a  great  crisis  of  that  kind,  of  mak- 
ing aiiy  assessment  on  the  resources  of  the  other  national  banks.  But  of  the 
1.T.S  banks  which  suspi-nded  payment,  86  banks,  with  a  capital  sto'k  of  i;l>',;'05,- 
(XX),  resumi>d  business  within  the  year,  and  were  able  to  pay  all  tlic-ir  liabili- 
ties, incliiding  their  circulating  notes.  Only  65  banks,  with  a  ca]iit;d  stock  of 
$10.9;i5.(KHl,  i)assed  into  the  hands  of  receivers.  If  we  assume  tliat  tlie  notes 
of  the  05  banks  only  were  to  be  paid  out  of  the  safety  and  guaranty  funds, 
there  would  have  been  only  $8,200.U<X)  of  notes  outstanding  if  all  of  the  banks 
which  passed  into  the  hands  of  receivers  had  taken  out  notes  to  the  maximum 
amount  allowed. 

The  30  per  cent  guaranty  fund  would  have  paid  $3,460,000  of  these  notes, 
which  would  have  left  only  $4,100,000  to  have  been  paid  out  of  the  5  per  cent 
safety  fund.  But  all  of  the  failed  banks  had  available  assets,  which  would 
have  been  applied  to  the  payment  of  their  outstanding  notes.  Their  un- 
available a,ssets,  which  would  have  realized  something  in  the  end,  and  the 
ami>nnt  which  would  be  received  on  account  of  the  personal  liability  of  the 
stockholders,  would  further  lessen  the  amount  which  would  have  to  1)6  paid 
out  of  the  safety  fund.  If  it  should  bo  assumed  that  all  of  the  national  banks 
which  were  in  existence  on  the  31st  of  October,  1894,  were  organized  under 
the  ]iroposed  bill,  and  that  all  of  them  in  a  great  financial  crisis  should  fail, 
and  if  it  should  be  assumed  that  all  of  them  had  taken  out  circulation  to  the 
maximum  amount  allowed  by  the  proposed  bill,  the  conditions  would  then  be 
as  follows: 

The  whole  amount  of  circulation  would  be  $.504,00f),000.  The  guaranty  and 
safety  funds  in  the  Treasury  would  amount  to  $17C,(KJ(),000.  This  would  leavy 
$:{i.'<,i»ix  1,000  in  circulating  notes,  the  payment  of  which  would  be  secured  be 
pro  rata  assessments  upon  all  the  national  banks  whose  resources,  as  before 
stated,  amounted,  on  the  31st  of  October,  1894,  to  $3,473,933,055.  The  amount 
of  notes,  it  will  be  seen,  would  not  equal  10  per  cent  of  the  resources  out  of 
which  they  could  be  paid.  The  resources  of  tne  national  banks  do  not  include 
the  personal  hability  of  the  stockholders,  which  is  equal  to  the  whole  amount 
of  the  stock,  and  this  amount,  which  at  that  time,  as  before  stated,  was  $t>73,- 
OOfJ.fKlO,  is  an  additional  security  for  the  ultimate  redemption  of  the  circu- 
lating notes.  In  view  of  these  facts,  your  committee  are  of  the  opinion  that 
should  the  proposed  bill  become  a  law,  the  notes  which  would  be  issued  under 
it  would  be  absolutely  safe  under  any  and  all  possible  business  conditions. 

The  total  capital  of  State  banks  is  about  $375,000,000  and  their 
deposits  amount  to  about  $700,000,000.  If  they  should  take  out 
the  full  75  per  cent  of  circulation  allowed,  their  notes  would 
amount  to  $206,250,000.  Against  this  they  would  deposit  30  per 
cent  in  legal  tenders,  or  $01,875,000,  leaving  them  a  net  increase  of 
currency  with  which  to  supply  the  demands  of  business  of  $144,- 
375,000. 

Taking  national  and  State  banks  together,  if  they  should  take 
out  the  full  circulation  allowed,  their  notes  would  amount  to 
$710,250,000,  and  against  this  the  amount  of  legal  tenders  deposited 
would  be  $212,875,000. 

Thus  it  vnll  apjiear  that  even  if  the  capital  of  our  banks  should 
not  ])e  increased  at  all,  the  plan  of  the  Secretary  of  the  Treasury 
permits,  if  the  business  of  the  country  should  demand  it,  a  net 
exjiansion  of  our  currency  of  $497,375,000.  We  have  now  out- 
standing $498,000,000  of  legal-tender  notes.  Of  this,  as  much  as 
l74;j 


y 

$212,875,000  would  be  withdrawn  and  deposited  with  the  Treas- 
ury, so  that  it  would  be  relieved  of  the  necessity  of  redeeming 
them  in  gold  if  the  banks  should  take  out  the  full  circulation 
allowed. 

It  is  expressly  declared  that  the  Government  shall  not  be  liable 
for  the  redemption  of  any  of  the  bank  notes  issued  beyond  the 
amount  of  the  5  per  cent  safety  fund  deposited  v(ath  it  as  already 
stated.  What  is  known  as  the  Baltimore  plan,  like  that  of  the 
Secretary  of  the  Treasviry,  dispenses  with  the  deposit  of  Govern- 
ment bonds  as  a  security  for  note  issues,  and  requires  the  crea- 
tion of  the  5  per  cent  safety  fund.  It  authorizes  national  banks 
to  issue  notes  in  an  amount  equal  to  50  per  centof  their  paid-up  and 
unimpaired  capital,  and  makes  the  Goverimaent  responsible  for 
their  redemption. 

It  stops  here,  and  makes  no  effort  whatever  to  relieve  the  Treas- 
ury of  its  present  difficulties.  Nor  does  it  permit  State  banks  to 
issue  circulating  notes  under  any  circumstances.  The  difference 
between  it  and  that  of  Mr.  Carlisle  is  therefore  radical  and  fun- 
damental. 

The  national  banks  provided  for  under  the  pending  bill  differ 
from  those  existing  under  the  present  law  as  widely  as  possible. 

Under  the  present  law  national  banks  are  required  to  deposit 
bonds  of  the  Government  as  a  security  for  their  notes,  but  they 
are  only  allowed  to  issue  notes  in  an  amount  equal  to  90  per  cent 
of  the  face  or  par  value  of  the  bonds  deposited.  In  addition  they 
are  required  to  leave  with  the  Treasury  5  per  cent  as  a  redemp- 
tion fund. 

United  States  bonds  are  at  such  a  premium  that  it  would  cost 
to  buy  $100,000  of  them  about  $115,000,  so  that  a  bank  depositing 
$100,000  of  bonds  would  lose  aU  benefit  of  the  premium  of  $15,000 
and  the  $5,000  redemption  fund,  and  would  get  back  in  bank 
notes  but  $90,000.  It  is  therefore  so  unprofitable  that  national 
banks  have  been  for  many  years  reducing  instead  of  increasing 
their  circulation. 

Under  Mr.  Carlisle's  plan  they  would  be  allowed  to  issue  notes 
amounting  to  75  -per  cent  of  their  capital  upon  de^^ositing  30  per 
cent  in  legal  tenders.  This  would  encourage  the  establishment 
of  banks  in  those  parts  of  the  South  and  West  where  now  a  bank 
does  not  find  it  profitable  to  go,  to  the  infinite  benefit  of  the  peo- 
ple. The  plan  looks  to  the  ultimate  retirement  of  all  Government 
notes,  but  not  until  their  place  has  been  filled  by  bank  notes  so 
that  there  shall  be  no  contraction.  I  am  confident  that  under  it 
the  amount  of  currency  in  the  section  in  which  I  reside  would  be 
greatly  enlarged,  that  rates  of  interest  would  be  very  much  low- 
ered, and  that  vast  relief  would  be  given  to  the  people. 

It  has  been  so  long  since  we  had  bank  notes  based  upon  bank 
credit  that  the  impression  prevails  with  many  that  the  notes  of 
our  antebellum  State  banks  were  utterly  worthless  and  ineffi- 
cient, or  to  use  the  popular  expression,  that  they  were  "wild-cat 
money."  This  is  wholly  unfounded.  Here  is  what  Mr.  George 
A.  Butler,  president  of  the  National  Tradesman's  Bank  of  New 
Haven,  said  a  few  days  ago  before  the  Banking  and  Currency 
Committee  of  the  House  of  Representatives: 

Much  as  the  old  State  banks  have  been  censured  and  maligned,  the  country 
never  suffered  the  annual  depression,  the  severe  constrictions  in  moving 
1743 


10 

crops,  which  it  has  suffered  under  our  present  financial  system.  With  a  cir- 
cuhition  that  never  exceeded  at  its  highest  point  $:iO(),()()(XO(JO,  there  never  was 
any  dilliculty  then  in  moving  cotton,  corn,  and  wheat  to  market.  The 
notes  of  the  l5tato  banks  expanded,  the  wheat,  cotton,  and  corn  came  to  mar- 
ket, and  the  notes  followi'<i  and  went  into  th(;  Ix.nks  and  remained  there  un- 
til another  occasion  of  a  similai'  character  oc<nirred. 

There  can  be  little  doubt  that  if  the  war  had  not  intervened  our 
State  banks  would  have  participated  in  the  general  improvement 
and  progress  that  the  skill,  ingenuity,  sagacity,  and  common  sense 
of  OUT  people  have  so  consj)icuously  stamped  and  with  such 
marked  benefit  and  success  upon  all  modern  methods  of  business. 
They  would  in  time,  by  natural  growth  and  evolution,  have  fur- 
nished us  with  a  sound,  abundant,  and  elastic  currency. 

The  cry  is  raised  that  inasmuch  as  Thomas  Jefferson  was  opposed 
to  banks  of  issue  it  is  undemocratic  to  advocate  them.  It  is  suf- 
ficient to  say  that  the  Democratic  party  never  followed  Mr.  Jeffer- 
son, or  adopted  his  \-iews  upon  this  question.  Banks  of  issue  were 
constajitly  in  existence  and  througli  charters  granted  by  States, 
conti'olled  by  Democratic  legislatures,  until  they  were  destroyed 
by  the  10  per  cent  tax  imposed  upon  them.  Mr.  Jefferson  had  no 
acquaintance  with  banks  of  issue,  except  such  as  existed  in  his 
time,  and  owing  to  the  inconverflbility  of  their  notes  and  the  laws 
under  which  tliey  were  forced  into  circulation  they  could  have 
scarcely  have  been  more  poorly  adapted  to  use  as  money. 

Yet.  inferior  and  unscientific  as  colonial  paper  money  was, 
Thomas  Paine  said  of  it: 

Every  stone  in  the  bridge  that  has  carried  us  over  seems  to  have  a  claim 
upon  our  esteem;  but  this  was  the  corner  stone,  and  its  usefulness  can  not 
be  forgotten. 

If  we  are  to  have  paper  money  at  all  it  must  be  in  the  form  of 
bank  notes,  for  the  Treasury  of  the  United  States,  having  no  rev- 
enues except  such  as  are  derived  from  taxation,  and  having  no 
means  of  regulating  them  either  as  to  amount  or  character,  has  not 
the  power  of  insuring  to  itself  the  ability  under  all  circumstances 
to  maintain  prompt  and  certain  redemption  of  its  notes.  To  put 
upon  it  the  duty,  as  our  present  system  does,  of  maintaining  the 
current  redemiition  of  a  large  quantity  of  legal-tender  notes  is  to 
impose  upon  it  the  obligation  of  a  bank  of  issue,  notwithstanding 
that  it  lias  not,  and  can  not  have,  the  resources  of  a  bank  of  issue 
with  which  to  discharge  that  ol)ligation. 

The  weakness  of  the  Treasury  upon  this  point,  and  its  painful 
and  hopeless  struggle  with  its  unnatural  burden,  being  observed 
of  all,  exercises  a  most  disturbing  effect  upon  the  business  of  the 
country. 

These  legal-tender  issues  are  such  a  serious  menace  that  what- 
ever benefit  may  have  been  derived  from  their  use  as  money  has 
many  times  been  overshadowed  by  the  disturbance  of  credit  and 
accompanjang  stagnation  of  business  they  have  produced. 

The  pending  bill  seeks  to  separate  the  Government  from  all 
connection  with  the  business  of  issuing  and  redeeming  paper 
money. 

There  is  one  feature  of  the  scheme  proposed  by  the  Secretary  of 
the  Treasury  which,  if  adopted,  would,  in  my  judgment,  afford 
great  relief,  though  it  has  been  scarcely  alluded  to  in  this  debate, 
so  far  as  I  have  observed.  In  discussing  this  question  we  are  apt 
to  think  onlj'  of  the  legal  tenders  in  the  shape  of  Treasury  notes 
174:J 


11 

and  greenbacks  that  you  can  take  to  the  Treasury  and  demand 
that  gold  be  exchanged  for  them.  But,  as  a  matter  of  fact,  the 
silver  certificates  which  we  have  out  are  just  as  harmful  in  re- 
ducing the  Treasury  to  its  present  condition  as  are  the  notes  for 
which  every  holder  has  the  right  to  demand  gold.  It  makes  no 
difference  hovir  you  keep  gold  out  of  the  Treasury — whether  you 
take  it  out  by  presenting  legal-tender  notes  for  redemption  in 
gold,  or  whether  you  keep  it  from  going  into  the  Treasury  by  pay- 
ing your  customs  dues  in  silver  certificates — no  matter  which  you 
do,  the  result  is  the  same.  I  hold  in  my  hand  a  statement  which 
shows  that  during  the  past  twelve  months  from  31  to  86  per  cent 
of  all  our  customs  dues  have  been  paid  in  silver  certificates. 

Mr.  SPRINGER.     And  none  in  gold. 

Mr.  CATCHESrOS.  None  in  gold.  But  that  is  foreign  to  the 
point  I  am  presenting  at  this  moment. 

I  repeat,  therefore,  that  just  as  great  disability  is  imposed  upon 
the  Treasury  by  the  payment  of  customs  dues  in  silver  certificates 
as  by  the  presentation  of  legal-tender  notes  for  redemption  in 
gold.  Now,  I  believe  that  under  the  plan  presented  by  the  Secre- 
tary of  the  Treasury,  by  which  all  paper  money  under  the  de- 
nomination of  $10  would  be  canceled,  you  would  supply  a  field 
which  would  be  fully  occupied,  and  in  the  most  useful  manner 
possible,  by  the  silver  money  which  we  have  to-day.  If  we  should 
cancel  all  the  greenbacks  and  all  the  United  States  Treasury 
notes  under  the  denomination  of  $10  we  would  provide  an  imme- 
diate demand  in  the  domain  of  retail  trade  for  all  silver  certifi- 
cates except  about  nineteen  millions.  For,  inasmuch  as  the  people 
must  have  small  money  with  which  to  transact  their  retail  busi- 
ness, the  withdrawal  of  our  greenbacks  and  Treasury  notes  under 
that  denomination  would  with  absohite  certainty  result  in  the  con- 
version of  the  large  silver  certificates  into  those  of  smaller  de- 
nominations to  take  the  place  of  the  retired  greenbacks  and  Treas- 
ury notes.  The  result  would  be  that  from  31  to  86  per  cent  of  our 
customs  dues  would  no  longer  be  paid  in  silver,  and  to  that  ex- 
tent very  great  relief  would  i.ome  to  the  Treasury. 

Mr.  Chairman,  I  have  no  doubt  that  ^\^th  such  a  use  of  silver 
certificates  and  its  accompanying  relief  to  the  Treasury  we  should 
find  it  within  our  power,  without  shocking  anynnan's  judgment 
or  in  the  least  degree  affecting  the  national  credit,  to  proceed  to 
coin  the  great  mass  of  bullion  now  in  the  Treasury,  and  finally 
to  redeem  and  cancel  the  Sherman  notes.  Under  such  conditions 
they  could  be  paid,  absolutely  redeemed,  as  they  were  meant  to  be. 

Mr.  SIMPSON.     Will  the  gentleman  permit  a  question? 

Mr.  CATCHINGS.     Yes,  sir. 

Mr.  SIMPSON.  The  gentleman  says  that  the  silver  certificates 
of  larger  denominations  would  be  converted  into  certificates  of 
smaller  denominations,  and  that  they  would  not  then  be  available 
for  the  payment  of  customs  dues. 

Mr.  CATCHINGS.  I  did  not  say  that.  I  said  that  they  would 
not  in  fact  be  used  for  that  purpose,  because  they  would  find  ample 
occupation  in  the  ordinary  transactions  of  business,  for  the  reason 
that  the  people  must  have  small  money  for  the  transaction  of  their 
ordinary  affairs. 

Mr.  SIMPSON.  I  do  not  see  why  they  would  not  be  used  for 
the  payment  of  customs  dues. 

1743 


12 

Mr.  CATC'HINGS.  They  would  not  be  so  used,  for  the  reason 
that  tlu'y  woukl  be  needed  and  requii-ed  and  used  for  ordinary- 
business  transactions. 

]Mr.  SI^NIPSON.  They  would  be  used  for  paying  debts.  Now, 
if  I  found  that  I  owed  the  Government  a  debt,  and  those  silver 
certificates  were  a  legal  tender,  why  would  I  not  use  them  to  pay 
that  debt? 

Mr.  CATCHINGS.  I  think  that  if  my  friend  wanted  to  pay  the 
Government  a  debt,  and  he  had  silver  certificates  of  small  denomi- 
nations, he  would  hardly  resort  to  the  roundabout  method  of 
sending  them  to  some  port,  New  York  for  instance,  where  they 
might  be  iised  in  payment  of  customs  duties. 

Mr.  DINGLE Y.  That  is,  they  would  not  accumulate  in  the 
commercial  centers. 

Mr.  CATCHINGS.  Of  course  not.  They  would  circulate  all 
over  the  country. 

Mr.  SIMPSON.  That  is,  they  woiild  be  good  enough  for  the 
farmers  and  the  jieople  of  the  rural  districts,  but  they  would  not 
do  for  the  big  fellows  in  the  cities? 

Mr.  CATCHINGS.  Oh,  well,  Mr.  Chairman,  I  have  no  time  to 
engage  in  anv  of  that  sort  of  claptrap  with  the  gentleman. 

iSIr.  SIMPSON.     I  am  sorry. 

Mr.  WARNER.  If  the  gentleman  will  permit  me,  I  will  say 
that  as  a  matter  of  fact,  although  there  is  no  provision  of  law  in 
relation  to  it,  the  customs  dues  are  now  paid  in  bills  or  certificates 
of  large  denominations. 

^Ir.  CATCHINGS.     Certainly;  as  a  matter  of  convenience. 

Mr.  WARNER.  So  that  as  a  matter  of  mere  convenience  the 
fact  tliat  the  silver  certificates  were  put  into  bills  of  small  denomi- 
nations would  practically  exclude  them  from  being  used  for  the 
I)a>'ment  of  customs  dues. 

M  r.  SIMPSON.  Now,  that  is  what  I  want  to  get  at.  If  the 
large  certificates  are  destroj^ed,  will  not  the  people  be  forced  to 
use  the  smaller  ones? 

Mr.  SPRINGER.     They  will  want  to  use  them. 

Mr.  SIMPSON.     They  ^vill  have  to  use  them. 

Mr.  CATCHINGS.  I  must  decline  to  yield  further.  I  think 
that  gentlemen  who  are  listening  to  me  understand  quite  well  the 
point  I  make  without  my  engaging  further  in  this  colloquy. 

Now,  Mr.  Chairman,  the  plan  known  as  the  Baltimore  plan  met 
the  indorsement  of  more  than  sis  hundred  bankers. 

^Ir.  SPRINGER.     Seventeen  hundred  met  in  convention. 

Mr.  CATCHINGS.  Seventeen  hundred,  my  friend  from  Illinois 
tells  me.  I  was  making  mj-  statement  upon  the  authority  of  what 
I  had  read  in  a  newspaper. 

Now,  is  it  not  surprising  that  every  banker  practically  in  the 
United  States  is  fighting  bitterly  this  plan  of  the  Secretary  of  the 
Treasury  which  runs  almost,  except  as  to  two  essential  features, 
upon  all  fours  with  the  Baltimore  plan?  The  fundamental  ditfer- 
ence,  Mr.  Chairman,  between  the  Baltimore  plan  and  that  which 
we  have  up  for  discussion  is  that  the  Baltimore  plan  proposes  to 
make  the  Government  still  stand  siKmsor  for  the  issues  of  the 
banks,  while  under  this  i)lan  the  Treasury  is  under  no  obligation 
of  that  kijid  whatever.  That  is  the  key  to  the  whole  opposition. 
If  we  were  willing  to  provide  in  this  bill  that  the  Goverrmient 

1713 


13 

should  stand  behind  the  notes  of  the  banks,  there  would  be  no 
longer  anj"  opposition  to  the  30  per  cent  deposit  of  greenbacks  or 
to  any  other  part  of  this  measure.  If  this  bill  passes,  as  we  pro- 
pose it  shall  pass  if  we  can  get  the  votes,  all  the  notes  provided  for 
resting  mainly  upon  bank  credit,  no  matter  how  good  they  may 
be  thought  to  be,  would  be  constantly  sent  back  for  current  re- 
demption, as  they  ought  to  be,  to  the  banks  that  issued  them. 
Now,  the  iirofit  of  a  bank  upon  its  issues  is  largely  measured  by 
the  length  of  time  that  they  remain  in  circulation  before  being 
returned  for  redemption.  Under  the  Baltimore  plan,  with  the 
Government  standing  sponsor  for  them,  bank  notes  would  be  just 
as  good  at  one  time  as  another,  without  any  sort  of  regard  to  the 
condition  of  the  bank  that  issued  them  or  whether  they  were  pre- 
sented to-day  or  ten  years  from  now.  For  that  reason  such  issues 
would  remain  a  long  time  in  circulation  before  coming  back  for 
redemption.  That  in  my  judgment  is  the  key  to  the  whole  fight 
that  the  bankers  are  making  upon  this  bill. 

Mr.  BOATNER.  Will  the  gentleman  allow  me  a  suggestion? 
Is  it  not  also  a  significant  fact  that  the  bankers  in  the  great  cen- 
iers,  who  have  been  in  the  habit  of  rediscounting  largely  for  the 
tnterior  banks,  are  also  opposed  to  the  bill?  Is  not  that  fact — 
that  they  may  be  deprived  of  the  opportunity  to  loan  a  good  deal 
of  money  in  the  way  of  rediscounting — a  factor  in  the  situation? 

Mr.  CATCHINGS.  I  am  disposed  to  question  the  correctness 
of  that  surmise. 

Mr.  DINGLEY.  "Will  the  gentleman  pardon  me  a  moment, 
because  I  know  he  desires  to  reach  a  correct  statement? 

Mr.  CATCHINGS.     I  do. 

Mr.  DINGLEY.  After  all,  does  not  the  real  opposition  to  the 
plan  proposed  here  on  the  part  of  those  who  favor  the  Baltimore 
plan  arise  from  the  fact  that  this  measure  proposes  a  rehabilita- 
tion of  the  State  banks  of  issue,  while  the  Baltimore  plan  does 
not? 

Mr.  CATCHINGS.  No,  sir.  I  have  heard  that  feature  criti- 
cised, but  the  criticism  was  made  merely  as  an  incidental  pre- 
text for  opposition.  I  have  also  heard  objection  made  to  the  30 
per  cent  deposit  of  greenbacks  required,  but  I  do  not  doubt  that 
the  objection  is  an  incidental  pretext  for  opposition.  If  this  bill 
were  amended  so  as  to  make  the  Government  stand  sponsor  for 
the  notes  provided  for  by  it  the  gentleman  from  Maine  and  others 
might  object  to  State  banks  upon  principle,  but  these  bankers 
who  are  now  up  in  arms  would  be  satisfied  to  take  the  measure  in 
that  form  and  would  in  my  opinion  withdraw  their  objection  in- 
stantly.    I  have  no  sort  of  doubt  of  it. 

Now,  Mr.  Chairman,  our  people  have  for  a  long  time  been  ac- 
customed to  bank  notes  for  which  the  Government  was  respon- 
sible, and  if  we  would  adopt  a  plan  which  would  be  acceptable  to 
the  people  we  must  at  the  very  outset,  no  matter  how  we  might 
be  able  hereafter  to  modify  it,  begin  by  making  the  notes  that 
we  propose  to  authorize  so  absolutely  good  that  they  will  be  ac- 
cepted cheerfully  l)}-  the  American  people.  I  believe  myself  that 
a  bank  note  secured  by  the  assets  of  the  bank  and  the  right  to 
proceed  against  the  stockholders  of  the  bank  is  as  good  money  as 
can  be  made  under  any  scheme  that  the  wit  of  man  can  devise. 
I  have  no  sort  of  doubt  that  if  such  a  system  of  bank  issues  was 
1743 


14 

in  operation  for  a  short  time  they  would  become  acceptable 
throuy:li()Ut  this  country.  But  we  must  keep  in  mind  that  our 
peojjle  have  been  accustomed  to  a  different  kind  of  bank  note, 
and  K)  it  is  tlie  i)art  of  i)riKlence  that  we  shouhl.  at  the  beginning 
at  all  .  .vuts.  Ko  beyond  an  amplitude  of  security  for  the  purpose 
of  insurhi^  that  these  notes  shall  be  acceptable  to  the  people. 

Now,  the  plan  offered  by  the  Secretary  of  the  Treasury  not  only 
gives  a  first  lien  on  the  assets  of  the  bank  and  also  the  liability  of 
the  stockholders,  but  while  withdrawing  the  bond  deposit  required 
by  existing  law  supplies  its  i)lace  by  exacting  a  deposit  with  the 
Treasury  of  'SO  per  cent  of  legal-tender  notes  for  which  the  Gov- 
ernment itself  is  liable;  and  I  do  not  think  anj"^  man  in  America 
can  be  found  who  will  not  say  that  under  such  provisions  the 
notes  would  be  absolutely  good.  It  has  not  been  denied  in  this 
debate,  and  will  not  be,  that  the  notes  issued  under  the  plan  sug- 
gested by  Mr.  Carlisle  would  be  perfectly  and  absoliitely  safe, 
secure,  and  sound.  The  only  criticism  that  has  been  made  on  this 
point  is  that  it  exacts  too  much  security,  and  would  be  so  burden- 
some to  the  banks  that  they  could  not  afford  to  take  out  circula- 
tion under  it.  But  it  seems  to  me,  Mr.  Chairman,  that  the  com- 
plete answer  to  that  criticism  is  that  the  30  per  cent  of  greenbacks 
which  are  deposited  have  their  places  taken  by  that  amount  of 
bank  notes  authorized,  thias  making  the  banks  whole  as  to  that; 
and  that  the  banks  may  issue  45  per  cent,  I  think,  in  addition,  as 
their  biisiness  may  demand. 

Now,  it  has  been  said  that  if  we  adopt  the  plan  of  the  Secretary 
of  the  Treasury  we  would  not  put  an  end  to  the  raids  for  gold  on 
the  Treasury.  That  is  possible.  But  if  we  should,  as  is  proposed, 
make  such  use,  as  I  have  explained,  of  all  of  the  silver  certificates 
in  the  country  except  about  nineteen  millions  that  they  would  no 
longer  be  paid  in  for  customs  dues,  and  by  that  means  keep  gold 
out  of  the  Treasury,  and  if  we  should  withdraw  30  per  cent  of  the 
greenbacks  and  Treasury  notes  outstanding,  by  having  them  de- 
posited as  security  for  bank  notes,  no  man  can  deny  that  we 
\vill  have  made  the  operation  of  raiding  the  Treasury,  now  per- 
formed with  such  great  facility,  one  of  comparative  difficulty;  and 
that  it  would  operate  to  afford  extensive  relief  to  the  Treasury  I 
am  quite  clear. 

But  in  discussing  this  question  it  must  be  borne  in  mind  that 
the  Secretary  of  the  Treasury  understands  that  we  must  deal  with 
the  question  in  view  of  conditions  as  they  are,  that  he  fully 
understands  that  there  can  be  no  absolute  remedy  afforded  except 
the  heroic  one  of  canceling  and  destroying  all  of  the  legal  tenders, 
and  that  he  seeks  ultimately  to  approach  that  end,  in  which 
desire  I  am  in  full  accord  with  him.  But  he  knows,  as  we  all 
do,  that  no  matter  how  desirable  that  end  may  be,  neither  of 
the  great  political  parties  in  this  country  will  contemplate,  even 
for  a  second  of  time,  the  funding  of  all  of  the  legal  tenders  and 
their  immediate  \Nnthdrawal  from  circulation  without  putting 
something  in  their  place.  It  may  be  right  to  do  it.  I  am  not  dis- 
cussing that.  But  1  am  discussing  this  question  as  a  practical 
man,  and  I  say  that  there  are  comparatively  few  in  either  party 
who  would  vote  to  destroy  the  legal  tenders  withoiit  at  the  same 
time  i)roviding  something  to  take  their  place.  So,  when  theorists 
come  here  and  insist  that  there  is  but  one  remedy,  and  that  the 

1743 


15 

cancellation  of  all  the  legal  tenders,  while  we  may  concede  the 
principle  of  it,  yet  we  recognize  the  fact  that  it  is  wholly  imperti- 
nent even  to  sxTggest  it. 

One  great  superiority  of  Mr.  Carlisle's  plan  over  that  devised  in 
Baltimore  by  the  hankers  is  that  it  does  contemplate  the  ultimate 
retirement  of  all  of  the  Grovernment  issues.  It  makes  a  beginning 
in  that  direction,  whereas  the  Baltimore  plan  had  in  view  nothing 
beyond  the  interests  of  the  private  gentlemen  composing  the  con- 
vention. I  have  been  much  surprised  that  our  eloquent  colleague 
from  New  York  [Mr.  Hendrix]  ,  who  descanted  with  so  much 
accuracy  in  describing  the  burden  of  the  legal  tenders  and  the 
necessity  for  their  extinction,  should  not  have  found  voice  in  that 
convention,  of  which  he  was  a  conspicuous  member,  to  suggest 
that  some  provision  of  that  sort  should  be  made. 

Mr.  HENDRIX.     Will  the  gentleman  allow  an  interruption? 

Mr.  CATCHINGS.     Yes,  sir. 

Mr.  HENDRIX.  There  was  not  a  single  banker  in  the  Balti- 
more convention,  or  a  single  man  who  supported  that  plan  when 
it  was  presented,  not  a  single  gentleman  who  advocated  it  either 
there  or  anywhere  else,  who  did  not  proceed  on  the  theory  that  the 
Government  would  retire  its  demand  notes. 

Mr.  SPRINGER.     Why  did  they  not  make  some  provision  for  it? 

Mr.  HENDRIX.  It  was  not  their  business  to  do  so.  They  were 
not  acting  outside  their  province. 

Mr.  CATCHINGS.  The  gentleman  from  New  York  is  well 
acquainted  with  our  statutes  and  well  knows  that  we  have  an 
express  law  which  forbids  the  retiracy  of  a  single  dollar  of  the 
gi'eenbacks,  and  no  law  under  which  the  Treasury  notes  of  1890 
can  be  canceled;  and  he  well  knows  that  it  requires  positive  legis- 
lation under  which  power  shall  be  conferred  for  their  extinction 
either  presently  or  ultimately,  and  yet  there  was  no  suggestion  in 
that  beautiful  plan  that  these  gentlemen  devised  around  the  ban- 
quet table  in  Baltimore. 

I  say,  Mr.  Chairman,  that  the  plan  suggested  by  Mr.  Carlisle  is 
a  great  step  forward  to  reach  an  important  economic  result  in  our 
finances,  and  it  stamps  his  measure  with  infinite  superiority  over 
that  so  ostentatiously  paraded  by  the  bankers  in  Baltimore. 

Mr.  Chairman,  there  is  an  impression  among  some  people  that 
greenbacks  are  the  favorite  money  of  the  American  people,  and 
some  think  it  is  almost  a  sacrilege  to  hint  at  a  possibility  of  their 
cancellation.  At  one  time,  indeed,  the  greenbacks  did  constitute 
a  popular  money  with  the  American  people,  but  it  has  been  many 
a  long,  weary  day  since  they  have  had  the  opportunity  to  handle 
or  make  use  of  them.  They  might  as  well  not  be  in  existence,  so 
far  as  you  and  I  are  concerned,  because  so  far  from  being  the  peo- 
ple's money  they  have  become  the  bankers'  money.  [Applause.] 
The  greenbacks  no  longer  circulate  among  the  people,  but  are 
held  almost  exclusively  by  the  bankers. 

What  I  want  is  to  destroy  the  bankers'  money  and  give  a  cur- 
rency which  the  i)eople  can  get  the  benefit  of  and  can  make  use 
of,  and  that  I  think  we  get  under  this  plan  of  Mr.  Carlisle's.  Why 
should  we  continue  the  existence  of  these  greenbacks  and  legal 
tenders  in  order  that  banks,  knowing  that  they  are  the  equivalent 
of  gold,  may  quietly  put  them  away  in  their  reserves  or  in  their 
vaults,  to  be  peddled  out  to  all  who  wish  to  get  gold  from  the 

1743 


16 

Treasury  ror  exportation  or  otherwise?  Sir,  the  wit  of  man  could 
not  devise  a  scheme  more  favorable  to  the  hanking  interests  of  this 
country  than  to  maintain  these  legal  tenders.  I  confess  that  I  am 
surprised  wlienever  I  hear  a  banker  talk  about  canceling  them. 

A  great  deal  of  fuss  and  feathers  is  made  by  some  gentlemen 
whenever  the  proposition  of  permitting  State  banks  to  issue  their 
circulating  notes  is  broached.  The  reports  show  that  the  sound- 
ness of  State  banks,  as  evidenced  by  the  ratio  of  capital  to  loans 
and  reserves,  is  absolutely  as  good  as  that  of  the  national  banks. 
We  have  a  system  of  State  banks  in  this  country  just  as  well  offi- 
cered, just  as  well  managed,  presided  over  by  just  as  honest  men, 
and  just  as  i)atriotic  citizens  as  can  be  found  in  connection  with 
the  national  banking  system.  Their  capital  amounts  to  $270,000,- 
000,  and  they  are  intrusted  by  customers  with  $700,000,000  of  de- 
posits. Why  should  not  such  institutions  be  vested  with  the 
pri\'ilege  of  issuing  their  circulating  notes,  if  we  are  to  confer  it 
upon  national  banks?  There  would  be  no  more  danger  in  a  State- 
bank  note  than  in  a  national-bank  note  under  the  plan  which  we 
have  uj)  for  discussion;  because,  barring  the  requirement  of  the  5 
per  cent  safety  fund,  the  security  exacted  is  the  same  in  one  case 
as  in  the  other. 

There  is  a  good  reason  why  Mr.  Carlisle  did  not  provide  for  a  5- 
per-cent  safety  fiand  as  to  State  banks.  It  would  be  a  great  bur- 
den to  them  and  yet  would  furnish  no  substantial  security.  The 
ntunber  of  State  banks  in  each  different  State  is  so  smaU,  that  to 
require  a  deposit  of  5  per  cent,  while  being  a  gi-eat  burden  to  them, 
would  furnish  no  sort  of  security  to  the  holders  of  their  notes, 
whereas  when  you  embrace  in  a  system  banks  extending  all  over 
the  United  States,  as  nafional  banks  do,  the  5-per-cent  fund  does 
become  an  active  and  substantial  security. 

So  far  as  the  tax  of  one  half  of  1  per  cent  per  annum  upon  the 
circulation  of  national  banks  is  concerned  it  could  not  be  imjiosed 
upon  the  State  banks,  for  that  tax  is  not  proi)()sed  for  the  purpose 
of  supplying  the  Treasiiry  with  revenue,  but  simply  for  the  pur- 
pose of  providing  it  \%'ith  the  means  of  printing  and  engi'uving 
national  bank  notes,  executing  the  law.  and  maintaining  the 
general  administration  of  the  system.  Of  course  such  a  tax 
could  not  be  exacted  of  State  banks;  but  does  any  gentleman 
supijose 

Mr.  COX.    Will  the  gentleman  yield  to  me  for  one  moment? 

Mr.  CATCHINGS.     Yes,  although  I  wish  to  hurry  on. 

Mr.  COX.  I  want  to  call  your  attention  to  one  point.  You 
must  remember  the  additional  fact  in  behalf  of  the  national-bank 
notes  that  they  are  receivable 

Mr.  CATCHINGS.  I  am  coming  to  that  presently,  if  you  will 
wait  and  allow  me  to  go  along  Avith  my  argument.  Mr.  Chairman 
it  can  not  be  assumed — it  would  be  folly  to  assume — that  you, 
would  have  a  State  banking  system  without  some  supervision  by 
the  State,  and  that  supervision  would  necessarily  be  accompanied 
by  some  expense,  and  the  States  themselves  would  unquestionably 
impose  as  great  a  tax  as  one  half  of  1  per  cent  upon  the  notes  of 
their  banks  for  the  purpose  of  providing  the  means  of  executing 
their  banking  laws. 

Laborious  argument  has  been  made  to  establish  the  fact  that 
these  so-called  exceptions  in  favor  of  State  banks  would  consti- 
1743 


17 

tute  a  great  inducement  to  national  banks  to  surrender  their  char- 
ters and  become  State  banks.  There  is  one  absolute  and  complete 
answer  to  that  whole  proposition,  and  that  is,  that  the  notes  of 
national  banks  would  continue  to  be,  as  they  now  are,  legal  ten- 
ders in  the  payment  of  all  debts  to  all  national  banks  and  of  all 
dues  to  the  Government  except  customs,  whereas  the  notes  of 
State  banks  would  be  a  legal  tender  for  no  purpose  on  the  face  of 
the  earth.  The  necessary  effect  of  this  would  be  that  the  notes  of 
national  banks  woiild  have  a  far  wider  circulation  than  the  notes 
of  State  banks  could  possibly  be  expected  to  have. 

And  having  this  wider  circulation,  they  would  be  longer  in  re- 
turning for  redemption,  and  conseqiiently  the  profit  of  national 
banks  xipon  their  notes  would  be  much  greater  than  that  of  State 
banks.  There  would  be  no  serious  competition  between  State 
banks  and  national  banks.  Yet  if  State-bank  notes  should  hap- 
pen to  stray  far  away  from  home  and  get  into  the  hands  of  the 
gentleman  from  New  York  [Mr.  Hendrix]  at  his  bank,  if  the  rate 
of  exchange  was  favorable  he  would  take  them  at  par,  and  if  not 
he  would  charge  a  small  discount,  just  as  he  would  if  I  should  go 
and  sell  him  a  draft  or  a  bill  of  exchange  drawn  by  my  bank;  and 
nobody  would  be  hurt  by  the  operation.  In  fact,  Mr.  Chairman, 
to  my  mind  one  of  the  most  attractive  features  of  this  whole  pro- 
posed system,  even  as  to  national-bank  notes,  is  that  inasmuch  as 
the  Government  is  not  to  be  responsible  for  their  current  redemp- 
tion, and  in  no  event  to  be  bound  for  them  beyond  the  safety 
fund,  they  would  necessarily  partake  of  a  local  character  more  or 
less  and  be  frequently  returned  for  redemption.  They  would 
largely  stay  at  home,  and  they  would  be  of  infinitely  more  service 
to  our  people  by  staying  at  home  than  by  floating  away  and  becom- 
ing congested  in  the  great  centers,  as  all  national  money  does. 

Speaking  for  myself,  I  would  be  glad  to  amend  this  bill  so  as  to 
provide  that  no  bank  shall  pay  out  over  its  counters  any  notes  but 
its  own,  so  as  to  make  them  drift  back  to  the  locality  in  which 
they  were  issued. 

What  a  strange  conception  some  of  us  nowadays  have,  Mi\ 
Chairman,  of  a  bank  of  issue!  A  bank  of  issue,  in  its  true  sense, 
was  never  intended  to  be  a  medium  for  supplying  money  of  ex- 
tensive and  prolonged  circulation.  The  true  conception  is  a  bank 
with  a  paid-up  capital  of  active,  live,  qiiick  assets,  which  under 
ordinary  conditions  will  supply  all  the  money  that  its  community 
wants,  but  which,  when  a  little  stress  for  money  exists  in  that 
community,  meets  it  by  issuing  its  notes,  to  be  redeemed  and  re- 
tired when  the  demand  for  money  again  becomes  normal. 

Measured  by  that  standard  our  national  banks  are  not  banks 
of  issue  at  all.  If  we  should  organize  under  our  present  law  a 
bank  with  a  caxiital  of  $100,000  and  should  take  out  the  full 
amount  of  circulation  we  would  be  in  the  attitude  of  a  bank  hav- 
ing its  notes  out  with  nothing  to  redeem  them  with,  as  our  capi- 
tal would  all  be  tied  up  in  the  bonds  deposited  with  the  Treasury; 
and  it  has  only  been  made  possible  to  organize  and  conduct  banks 
under  such  a  system  because  the  Government  stood  ready  to  sup- 
ply the  capital  with  which  to  redeem  their  notes.  Why  a  national 
bank  absolutely  strips  itself  of  all  its  capital  to  the  extent  that  it 
takes  out  notes;  and  we  saw  the  discredit  that  fell  upon  banks  of 
issue  in  antebellum  days,  whose  notes  were  supposed  to  be  secured 
1743 2 


18 

by  deposits  of  honds,  which  sprang  up  all  over  the  West,  and  whose 
inevitable  collni)se  crt'ated  such  a  feeling  against  State  banks. 
Biit  there  were  other  State  banks  organized  ui)on  sound  princi- 
ples, wliose  notes  tvera  secured  by  live  assets,  that  furnished  to 
the  peoi)le  of  this  country  a  very  sound  and  useful  kind  of  money. 
I  have  seen  it  recently  stated,  perhaps  in  the  speech  of  my  friend 
from  New  York  [Mr.  Warner],  who  has  a  great  way  of  finding 
out  everything  that  is  useful  and  good,  that  in  the  time  of  the  old 
State  baidcs  the  whole  of  the  capital  of  the  New  England  States 
wasbut>;r)(l,000,000,  and  that  the  redemption  of  their  notes  through 
the  Bank  of  Suffolk  alone  was  $-100,000,000  a  year.     I  say  that  the 

Eeople  of  New  England  in  those  days  had  better  money  than  they 
ave  ever  had  since,  a  most  active,  a  most  efficient,  and  useful 
money. 

I  have  not  been  able  to  see  much  beyond  a  sentiment  or  a  fanciful 
notion  in  the  idea  that  all  our  bank  issues  must  be  uniform  in  ap- 
pearance. Under  the  provisions  imposed  upon  them  by  this  bill 
they  would  be  absolutely  uniform  so  far  as  their  security  went. 
Now,  it  has  been  said  that  one  of  the  great  advantages  of  the 
national  banking  system  is  that  every  man  knows  that  the  note 
of  every  national  bank  is  issued  and  secured  in  the  same  manner, 
and  that  the  charter  of  one  bank  is  the  charter  of  all.  There  is 
much  to  be  said  in  behalf  of  that  claim.  But  the  particular  thing 
that  the  note  holder  wants  to  know  is  not  so  much  the  many  de- 
tails of  the  charters,  but  what  security  there  is  for  the  notes  he  is 
asked  to  take  or  to  help  put  in  circulation. 

If  tliis  plan  of  Mr.  Carlisle's  should  become  law,  the  taker  of 
every  State  bank  note  would  know  that  that  note  is  secured  just 
as  all  other  State-bank  notes  are  secured,  and  .inst  as  the  notes  of 
every  national  bank  is  secured;  for  the  provisions  as  to  note  se- 
curity are  made  exactly  and  absolutely  the  same  both  as  to  State 
and  national  banks.  But  in  my  judgment,  Mr.  Chairman,  you 
would  in  the  main  find  State  banks  established  in  localities  where 
national  banks  will  not  go. 

Thej-  wo;ild  not  compete  to  any  great  extent  with  the  national 
banks,  as,  for  many  reasons,  the  banks  in  the  large  cities  would 
still  be  national  banks.  And  the  fact  that  the  notes  of  the  State 
banks  would  partake  of  a  still  more  local  character  is  one  thing 
which  commends  them  to  my  mind.  I  am  quite  aware  that  it  is 
often  said  that  Ave  of  the  South  and  West,  when  we  clamor  for 
more  money,  simply  represent  people  who  have  nothing  to  ex- 
change for  that  money,  and  that  our  clamor  has  no  foiindation. 
So  far  as  the  people  whom  I  rei)resent  are  concerned,  that  state- 
ment is  absolutely  without  foundation.  We  have  the  property  to 
exchange. 

We  have  planters  and  merchants  perfectly  solvent  and  able 
and  competent  to  meet  all  their  obligations,  but  there  are  many 
times  when  our  banks  are  wholly  incapable  ot  supplj'ing  the 
money  actually  needed  for  the  daily  transactions  of  business. 
One  conse(iuence  of  that  is  a  high  rate  of  interest.  There  are 
mercliants  in  my  city  whose  notes  would  be  taken  gladly  if  they 
were  known  in  New  York  as  they  are  in  Vicksburg  at  any  rate 
whicli  they  themselves  might  choose  to  fix,  but  who  are  compelled 
to  pay  from  8  to  12  per  cent  for  the  use  of  money,  and  of  course 
that  is  retaxed  upon  theii-  customers. 
1743 


19 

Mr.  WILLIAMS  of  Mississippi.    With  a  profit. 

Mr.  CATCHINGS.  With  a  profit.  So  that  this  clamor  for 
more  money  does  not  come  altogether  from  people  who  have  noth- 
ing to  exchange  for  it.  When  a  man  sees  that  he  is  himself  ham- 
pered by  reason  of  an  insufficient  supply  of  money  and  when  he 
sees  that  his  neighbors  are  in  the  same  condition,  and  when  they 
get  together  and  begin  to  talk  the  matter  over  you  will  at  once 
see,  Mr.  Chairman,  the  thought  naturally  strikes  every  man's 
mind  that  the  difficulty  results  from  a  scarcity  of  money  in  the 
country  at  larare. 

Mr.  WALKER.  The  old  Suffolk  system  of  Massachusetts  would 
have  answered  the  gentleman's  demand  exactly.  Under  that  sys- 
tem the  bank  might  have  several  thousand  dollars  of  its  own  bills 
in  its  till,  and  if  you  wanted  money  to  pay  out  locally  it  would  dis- 
count your  note,  but  if  you  wanted  money  to  pay  in  New  Yoi'k  or 
in  Boston,  the  bank  would  tell  you  that  it  could  not  discount  your 
note.  In  fact,  it  is  the  capital  that  you  borrow,  and  not  the  circula- 
tion; it  is  not  circulation  that  you  need  in  your  part  of  thecountry, 
but  capital. 

Mr.  CATCHINGS.  The  effect  would  be  that  if  a  State  bank,  or 
a  national  bank  either,  located  in  the  city  of  Vicksburg  had 
reached  a  point  where  it  had  made  use  of  all  the  money  of  its 
depositors  that  it  could  safely  use,  and  had  used  as  much  of  its 
own  capital  as  it  felt  that  it  could  safely  employ,  then  it  would 
have  got  to  a  pass  where  it  must  stop  doing  business  or  else  it 
must  go  to  New  York  (as  it  does  in  fact  xmder  the  present  system) 
and  by  discounting  its  portfolio  borrow  money  at  5  or  6  per  cent 
interest  and  come  back  and  lend  that  money  to  its  customers  at 
from  8  to  10  per  cent;  whereas  if  those  banks  were  authorized  to 
issue  their  notes  they  could,  so  to  speak,  capitalize  their  own  credit 
and  furnish  to  that  extent  the  equivalent  of  capital. 

Mr.  WALKER.  These  notes  would  be  of  no  more  value  to  the 
bank  than  a  simple  obligation  of  the  bank  not  printed  in  that 
form.  The  notes  of  the  bank  that  it  held  itself  would  be  of  no 
use  whatever  either  in  borrowing  from  another  bank  or  loaning 
to  a  customer. 

Mr.  CATCHINGS.  That  is  true  as  to  borrowing  from  another 
bank,  but  I  do  not  admit  the  last  part  of  the  gentleman's  state- 
ment. 

Mr.  WALKER.  Of  course  whatever  money  they  could  use  in 
circulation  would  be  all  right,  but  according  to  the  gentleman's 
own  statement  all  that  would  be  out  already  and  they  could  not 
loan  their  own  notes. 

Mr.  CATCHINGS.  Wliat  I  mean  is  that  to  all  intents  and 
purposes,  for  the  oliject  of  enabling  the  people  of  that  community 
to  have  more  facilities  for  the  transaction  of  their  business,  those 
notes  would  be  equivalent  to  a  certain  increase  of  capital.  I  find 
this  same  idea  stated  in  standard  works  on  banking,  so  that  I  do 
not  ask  this  committee  to  accept  it  as  something  coming  from  me. 
Of  course  when  the  notes  come  back  and  are  redeemed  and  can- 
celed that  is  the  end  of  them;  so  that  they  are  not  additional 
capital  in  the  sense  of  something  permanent  that  will  stay.  But 
in  the  other  sense  they  are  eqiiivalent  to  additional  capital.  If  a 
bank  has  a  capital  of  §100,000  and  can  issue  its  notes  for  $50,000, 
and  those  notes  have  the  same  force  and  effect  as  other  money  in 
1743 


20 

the  transaction  of  the  ordinary  business  of  the  community  in 
which  tlie  bank  is  located,  then  that  bank  furnishes  business 
facilities  equivalent  to  a  capital  of  $150,000. 

Mr.  WALKER.     If  they  can  keep  the  notes  out. 

Mr.  WILLIAMS  of  Mississippi.  They  can  certainly  keep  them 
out,  at  least  as  long  as  the  fellow  who  has  borrowed  them  wants 
them. 

Mr.  OATCHINGS.  Of  course,  as  long  as  there  is  a  demand  for 
them,  so  long  as  men  want  them  and  give  good  security  for  th«m, 
they  A\nll  stay  out;  and  when  that  state  of  things  ceases  they 
ought  to  l)e  tiirned  in  and  redeemed  and  canceled,  for  I  do  not 
know  of  anything  more  demoralizing  commercially  than  an  excess 
of  useless  money  piled  up  in  banks. 

Mr.  W  ASHINCtTON.  And  that  increased  currency  would  come 
without  having  to  pay  tribute  to  the  great  money  centers. 

Mr.  CATCHINGS.     Certainly. 

Mr.  WALKER.     Oh,  not  at  all. 

Mr.  CATCHINGS.  So,  Mr.  Chairman,  I  am  perfectly  satisfied 
upon  this  question  in  my  own  mind,  and  I  do  not  believe  that  any 
man  in  this  House  is  less  given  to  even  the  suggestion  of  unsound 
money  than  I  am. 

I  want  every  piece  of  money  which  goes  out  to  the  people,  whether 
it  goes  out  from  the  Treasury  or  from  a  national  or  State  bank,  to 
l>e  so  good  that  the  peopile  may  accept  it  with  absolute  confidence 
and  certainty.  But  I  do  not  want  it  so  good  (as  it  would  be  under 
the  Baltimore  plan  and  as  the  national-bank  notes  are  to-day  and 
as  the  greenbacks  and  Treasury  notes  are  to-day)  that  a  man  hav- 
ing this  money  and  having  no  use  for  it  would  hoard  it  or  lend  it 
to  a  bank  possibly  in  some  financial  center  where  it  woiild  find  its 
way  into  illegitimate  and  speculative  ventures.  I  want  it  to  be 
such  money  as  will  in  that  case  go  back  to  the  bank  that  issued  it 
and  retire  from  the  sight  of  the  people  altogether  until  a  new 
demand  arises  for  its  issuance. 

Mr.  Chairman,  what  takes  place  under  our  present  system?  The 
money  which  we  have  finds  its  way  to  the  great  financial  centers; 
and  wherever  you  have  what  may  be  called  a  fixed  or  a  national 
currency  it  will  continue  to  do  so.  There  are  times  in  the  year 
when  the  country  banks  have  no  use  for  their  money;  it  lies  in 
their  vaults  as  idle  and  profitless  capital,  which  woiild  not  be  the 
case  with  their  own  notes.  Now,  inducements  are  held  out  by 
these  great  centers  in  one  way  or  another  to  obtain  control  of  this 
currency  even  when  it  does  not  go  there  in  tiie  discharge  of  obli- 
gations. In  .some  cases  these  banks  at  the  great  centers  will  pay  a 
small  rate  of  interest,  which  is  a  consideration  to  the  country  bank, 
since  it  would  otherwise  have  its  money  idle. 

Of  course  the  New  York  banker  is  going  to  make  some  use  of 
this  money  if  he  can,  and  so  he  puts  it  out  in  one  shape  or  another. 
But  finally  the  time  comes  when  our  great  agricultural  crops 
must  be  moved — our  enormous  crops  of  cotton  and  gi'ain — and 
then  just  as  certainly  as  that  the  sun  will  rise  to-morrow  morn- 
ing there  comes  what  we  are  accustomed  to  speak  of  as  a  stringency 
in  the  money  market.  It  is  absolutely  inex'itable.  And  it  comes 
in  this  way:  The  country  banker  withdraws  his  deposits.  The 
city  banker,  knowing  that  the  deposits  vdll  be  withdrawn,  makes 
preparation  for  it  by  calling  in  his  loans.  And  there  conies  about 
a  general  diminution  and  curtailment  of  business. 
1743 


21 

The  effect  of  this  stringency  in  New  York  is  instantly  felt  like 
an  electric  shock  in  every  hamlet  in  our  whole  broad  land.  And 
the  effect  is  always  worse  than  the  conditions  would  justify;  be- 
cause the  merchant,  seeing  that  the  banker  is  calling  in  his  loans 
and  being  told  by  the  banker  that  times  are  getting  a  little  tight 
and  that  he  must  be  a  little  modest  in  his  demands,  begins  to  cur- 
tail his  trade.  The  manufacturer  and  every  other  business  man 
does  this.  And  inasmuch  as  it  is  impossible  for  them  to  tell  how 
serious  the  condition  is,  every  man  assumes  that  it  is  going  to  be 
worse  than  in  fact  the  conditions  would  make  it.  So  that  when- 
ever you  have  one  of  these  stringencies  it  is  exaggerated  in  its 
effects  and  is  infinitely  more  harmful  than  it  ought  to  be. 

Mr.  WILLIAMS  of  Mississippi.  I  think  it  might  be  of  interest 
to  others  if  my  colleague  would  state  his  experience  of  a  matter 
well  known  to  him  and  myself.  I  therefore  ask  him  whether 
there  does  not  occur  in  his  town  every  year  this  state  of  things, 
which  I  know  occurs  in  Yazoo  City  and  Meridian  and  other  towns 
of  our  State,  that  in  October  or  the  beginning  of  November  the 
banks  practically  quit  all  other  business  except  lending  money  to 
move  the  cotton  crop? 

Mr.  CATCHINGS.  That  is  absolutely  so;  and  they  are  some- 
times hard  put  to  it  to  get  money  with  which  to  move  the  crops. 
I  have  seen  such  a  condition  that  it  was  impossible  to  sell  cotton 
in  the  city  in  which  I  reside  for  a  week  at  a  time;  not  because 
there  was  any  fault  in  the  price  or  any  fault  in  the  general  demand, 
but  because  of  the  absolute  inability  to  supply  the  money  needed 
with  which  to  handle  and  sell  that  crop.  There  are  always  great 
difficulties  about  that;  and  it  is  a  very  costly  ijrocess  that  we  go 
through  with  in  this  country  whenever  our  great  crops  are  to  be 
harvested. 

We  can  never  remedy  this  condition  of  things  until  the  Govern- 
ment cuts  itself  loose  entirely  from  all  obligation  to  redeem  the 
paper  money  of  this  country.  So  long  as  the  Government  stands 
behind  this  money,  so  long  as  it  has  the  imx)riniatur  of  the  Gov- 
ernment upon  it,  you  have  made  it  equivalent  to  gold,  because 
every  man  knows  that  this  Government  never  means  to  let  its 
credit  suffer  any  sort  of  diminution;  and  that  is  equivalent  to 
saying  that  this  Government  means  to  make  its  obligations  as 
good  as  gold,  now  and  forever.  Consequently,  no  matter  what 
you  may  call  the  obligation — whether  it  is  a  Treasury  note  or  a 
greenback  or  a  national-bank  note  or  any  other  obligation — when- 
ever you  make  the  Government  bound  for  its  paj'uient  you  have 
at  once  given  it  those  characteristics  for  travel  which  will  make 
it  a  wanderer  from  home  and  the  habitue  of  the  great  centers — a 
condition  which  always  produces  this  great  congestion  and 
trouble. 

[Here  the  hammer  fell.] 

Mr.  DINGLEY.  I  ask  unanimoiis  consent  that  the  gentleman 
from  Mississippi  be  allowed  to  conclude  his  remarks. 

There  was  no  objection. 

Mr.  CATCHINGS.  I  am  very  much  obliged  to  my  friend  for 
the  courtesy. 

Now,  Mr.  Chairman,  there  is  nothing  new  in  this  question  of 
bank  money  depending  alone  for  its  redemption  on  the  bank  that 
issues  it.  It  is  only  new  to  us  of  this  generation,  who  have  been 
1743 


22 

accustoinod  to  get  along  without  such  issues.  But  if  you  go  to 
Greniiituy.  Franco,  England,  or  Canada  you  Avill  find  bank  issues, 
notos  not  paid  out  as  the  notes  go  out  of  our  Ti'easury  in  the  set- 
tlfuicnt  of  del)ts.  but  i)aid  out  in  the  course  of  banking  business, 
in  the  purchase  of  credits,  in  the  trcconiniodation  of  business,  in 
supplying  their  customers  with  the  monej^  needed  to  carry  on 
their  affairs.  That  is  the  way  their  notes  go  out,  and  there  is  no 
trouble  about  their  redeeming  their  notes. 

Every  man  who  takes  the  notes  of  a  bank  gives  to  the  bank 
something  in  excliange  for  thein.  If  a  banker  issues  a  thousand 
dollars  in  notes  to  me,  they  are  not  given  to  me  as  a  mere  donation, 
but  the  banker,  being  a  prudent  man  and  knowing  that  they  consti- 
tute an  obligation  which  he  must  be  ready  to  pay,  sees  to  it  that 
I  do  not  get  my  hands  on  those  notes  until  I  have  put  into  his  pos- 
session what  he  considers  as  an  ample  and  good  security  for  their 
payment.  Now,  the  affairs  of  a  bank  are  always  so  arranged  that 
while  it  is  constantly,  daily,  hourly,  I  may  say,  putting  out  its 
obligations  in  one  form  or  another  in  the  shape  of  deposits  or 
notes,  it  is  jiist  as  constantly  gathering  in  fr(.)m  its  customers 
the  resources  with  which  to  meet  the  fresh  obligations  as  they 
arise. 

Mr.  STOCKDALE.  Will  my  colleague  allow  me  to  suggest 
that  the  Louisiana  State  banks  were  always  at  a  premiiim? 

Mr.  CATCHINGS.  Oh.  ihey  were  always  good.  No  man  ever 
disputed  the  sufficiency  of  the  security  for  the  issues  of  the  banks  of 
Louisiana  and  those  in  many  other  parts  of  the  country.  Men  shrink 
fi'om  the  consideration  of  bank  notes  1  lecause  in  some  way  they  get 
the  idea  confused  in  their  minds  that  there  is  something  mysteri- 
ous or  exceptit)nal  about  that  sort  of  obligation,  whereas  there  is 
not  the  slightest  difference  between  the  obligation  of  the  bank  to 
return  to  the  depositor  his  deposit  than  there  is  for  the  bank  to 
make  good  the  note  it  issues  Avhen  presented  for  redemption. 

The  difference  is  simi)ly  a  difference  in  form.  Why,  when  you 
speak  of  extending  credit  to  banks  let  it  be  remembered  that  the 
American  people  have  deposited  not  less  than$4,(JUU,UUO,UU0  in  the 
banks  of  this  country.  Does  that  exhibit  a  lack  of  contidence  in 
the  banks? 

A  man  will,  according  to  his  means,  deposit  dailj^  with  his  bank 
a  hundred  or  a  hundred  thoiisand  (hdlars,  as  the  nature  of  his 
business  permits,  and  it  never  occurs  to  him  to  question  the  credit 
of  the  bank.  But  when  the  idea  is  suggested  that  he  might  i)0S- 
sibly,  in  the  course  of  events,  have  bank  notes  amounting  to  five 
or  possibly  five  hundred  dollars  paid  to  him,  the  '■  bogii;  man  "  is 
up  at  once  and  suggests  that  to  make  such  a  thing  possible  is  to 
perpetrate  a  great  crime  upon  the  people. 

And  yet,  Mr.  Chairman,  there  is  no  distinction .  except  a  matter 
of  form,  between  indebtedness  by  deposits  and  that  by  notes. 
Why,  the  bank  deposits  constitute  to-day  the  money  of  the  people. 
They  make  up  of  themselves  the  medium  by  which  probably  !)U 
per  cent  of  all  our  business  is  transacted 

Mr.  WALKER.     Ninety-five. 

Mr.  CATCHINGS.  And  they  do  it  better  than  we  possibly 
could  if  we  had  undertaken  by  legislation  to  meddle  with  the  mat- 
ter. You  go  to  the  gi'eat  cities  of  the  country  and  you  find 
there  that  very  few  of  the  banks  issue  their  notes,  simply  because 
1743 


23 

they  discover  that  the  use  of  money  in  the  form  of  bank  deposits 
is  in  the  kind  of  business  there?  done  better  adapted  to  the  needs  of 
the  great  cities  and  more  useful  to  their  customers.  But  when 
you  go  into  the  rural  districts,  where  depositors  are  scarce  and  the 
customers  of  the  banks  are  so  situated  that  they  can  not  use  so 
well  in  the  transaction  of  their  business  money  in  the  shape  of 
certificates  of  deposit  or  checlvs,  then  the  bank  note'  comes  into 
play,  and  banks  there  ought  to  be  permitted  to  make  such  use  of 
their  credit  as  will  best  supply  the  wants  of  the  communitj',  as 
they  do  now  without  any  law  in  the  great  cities  where  they  fur- 
nish their  customers  the  money  which  is  best  adapted  to  the  trans- 
action of  their  business  in  the  foi'm  of  deposits  against  which 
checks  are  drawn.  Coimtry  banks  and  those  in  small  cities  can 
best  meet  the  needs  of  their  customers,  by  furnishing  their  credit 
to  them  in  the  form  of  bank  notes. 

Mr.  HENDKIX.     Will  the  gentleman  allow  a  suggestion? 

Mr.  CATCHINGS.     Certainly. 

Mr.  HENDRIX.  Suppose  the  banks  should  issue  certificates  of 
deposit  under  the  existing  situation,  would  it  not  meet  the  de- 
mand to  which  the  gentleman  refers? 

Mr.  CATCHINGS.     I  think  not. 

Mr.  SPRINGER.     They  are  prohibited  by  the  10  per  cent  tax. 

Mr.  CATCHINGS.  And  it  would  not  be  the  sort  of  money, 
either,  that  the  people  are  accustomed  to.  They  are  accustomed 
to  handling  soniething  in  their  ordinary  transactions  which  has 
the  form,  the  appearance,  and  the  convenience  of  money. 

Mr.  WARNER.  If  my  friend  from  Mississippi  will  permit  me 
to  refer  to  the  point  which  seems  to  me  to  be  so  important,  which 
he  has  just  suggested — do  I  understand  the  particular  point  he  is 
pressing  now  is  the  extent  of  the  benefit  to  the  coimtry  districts 
and  to  the  districts  where  there  are  comparatively  few  depositors, 
of  an  elastic  bank-note  currency  bej'ond,  or  at  least  in  proportion 
to  that  which  would  be  given  to  the  larger  depositors  in  the  cities 
where  checks  are  used? 

Mr.  CATCHINGS.  Yes.  I  was  very  much  struck,  Mr.  Chair- 
man, by  a  very  interesting  and  eloquent  interview  with  my  friend 
from  New  York  [Mr.  Hendrix] — who  is  always  clear  in  express- 
ing his  views,  and  almost  always  eloquent — wliich  came  out 
shortly  after  the  adoption  by  the  bankers'  convention  at  Balti- 
timore  of  the  plan  suggested  there,  in  which  interview  he  made 
the  statement  tliat  if  our  system  had  been  such  as  was  there  pro- 
posed, by  the  bankers  having  a  margin  by  which  they  could 
have  increased  their  circiilation  of  credits  in  the  form  of  notes  to 
the  amount  of  50  per  cent,  they  could  have  stopped  the  money 
famine  in  1893  and  destroyed  it  in  ten  days.  I  believe  that  to  be 
true.  The  plan  of  Mr.  Carlisle,  if  it  had  been  the  law  in  1893, 
would  have  been  just  as  effective  as  the  Baltimore  plan  in  stop- 
ping the  money  famine  resulting  from  the  panic  of  that  year. 
The  business  of  the  country  is  struggling  against  old  traditions, 
striTggling  to  be  freed  from  the  swaddling  clothes  which  have 
kept  its  limbs  bound  to  its  side. 

The  banks  of  New  York,  perhaps  without  authority  of  law — 

certainly  not  by  authority  of  law— have  found  themselves  time 

and  again  compelled  to    combine  their  reserves  through  their 

clearing-house  certificates  in  order  to  provide  themselves  with 

1743 


24 

that  which  would  take  the  place  of  money;  and  yet  those  clear- 
ing-house certificates,  barring  the  fact  that  they  could  only  be 
used  by  the  banks  that  belong  to  the  association,  were  just  as  truly 
issues  of  those  banks^as  they  would  have  been  if  they  had  come 
in  the  form  of  notes  issued  by  the  several  banks  constituting  that 
association.     In  1893  $48,000,000  of  these  certificates  were  issued. 

Mr.  WALKER.     I  should  like  to  ask  the  gentleman  a  question. 

Mr.  CATCHINGS.     Certainly. 

]\Ir.  WALKER.  What  you  say  of  this  money  and  the  issuing 
of  it  I  believe  to  be  true,  and  you  have  heard  my  views  in  this 
Hoiise  with  reference  to  these  matters.  Now,  what  I  want  to  ask 
you  is,  what  conceivable  advantage  can  it  be  to  organize  banks 
with  a  charter  granted  by  a  State  rather  than  a  charter  granted 
by  tlie  nation  when  five  citizens  can  to-day  form  a  bank  anywhere 
under  the  conditions  which  apply  to  such  banks?  What  possible 
advantage  can  there  be? 

Mr.  CATCHINGS.  There  are  two  answers  to  that  question. 
Either  one  woiild  suffice. 

Mr.  WALKER.  That  is  what  we  want  to  know.  If  there  is 
an  advantage,  you  ought  to  have  it. 

Mr.  CATCHINGS.  If  you  give  the  privilege  to  issue  these  large 
amounts  of  uncovered  notes  to  our  national  banks,  and  deny  them 
to  our  State  banks,  you  have  exercised  an  improper  pressure  upon 
those  banks  to  abandon  their  State  charters  and  come  into  the 
national  system. 

Mr.  WALKER.  We  are  talking  now  about  the  people,  not 
about  the  bankers. 

Mr.  CATCHINGS.  I  am  talking  about  the  whole  thing.  Now, 
those  banks  prefer  to  be  State  banlc s  for  reasons  suitable  to  them- 
selves, and  they  are  good  banks.  The  States  have  the  right  to 
charter  banks.  Now,  to  my  mind,  it  will  be  quite  siafBcient  to 
say  that  we  have  no  right,  by  the  use  of  our  supreme  power,  to 
coerce  States  practically  into  the  cessation  of  chartering  banks. 
That  is  one  answer,  and  to  my  mind  it  is  sufficient,  because  those 
banks  would  have  to  go  out  of  business 

Mr.  WALKER.     Oh,  no. 

Mr.  CATCHINGS.  Or  they  would  have  to  become  national 
banks,  one  or  the  other.  I  mean  the  country  banks.  I  can  well 
understand  how  a  bank  wdth  a  large  line  of  deposits,  like  the  Chemi- 
cal National  Bank  of  New  York,  for  instance,  might  get  along 
without  note  issues  and  would  have  no  eartlily  use  for  them. 

The  second  answer  is  that  you  would  find  banks  multiplying  in 
all  the  little  towns  and  communities  in  the  South  and  West  if 
thej"  had  the  power  to  issue  their  uncovered  notes 

Mr.  WALKER.  A  proper  banking  bill  would  give  them  that 
lander  a  national  system.     My  bill  gives  that. 

Mr.  CATCHINGS.  That,  of  course,  would  not  answer  under 
the  present  system.  And  then,  again,  Mr.  Chairman,  speaking 
for  myself — I  have  already  emphasized  my  views  on  that  point — 
the  State  banks  would  furnish  to  those  sparsely  settled  communi- 
ties a  local  currency  which  would  be  satisfactory  to  them,  and 
which  people  elsewhere  would  not  be  troubled  with,  which  they 
would  never  see.  Tlierefoi'e  it  was  I  made  the  statement  a  mo- 
ment ago  that,  if  I  could  have  my  way.  I  would  reimpose  the  old 
inhibition  which  found  its  way  into  nearly  all  charters  in  this 

1743 


25 

<;ountry  prior  to  the  war,  against  any  bank  paying  out  any  notes 
but  its  own. 

Mr.  WALKER.  Now  one  tiling  further.  Is  it  not  a  fact  that 
the  moment  you  say  "local  issue"  you  say  "depreciated  cur- 
rency?" 

Mr.  CATCHINGS.    No,  sir;  I  do  not  think  so. 

Mr.  "WALKER.  For  this  reason.  When  you  say  local  issue, 
you  see  the  broker  attached  to  it,  jiist  as  under  the  Suffolk  sys- 
tem, with  which  I  did  business,  which  bank  had  two  brokers  who 
were  patrons  of  the  bank,  and  the  bank  sent  customers  to  them; 
and  therefore  the  moment  you  say  "local  issue"  it  involves  a  dis- 
count which  the  broker  is  allowed  to  change  the  money. 

Mr.  CATCHINGS.  Why,  Mr.  Chairman,  the  conditions  which 
surround  us  to-day  are  entirely  different  from  those  days. 

Mr.  WALKER.     They  are  identical  with  those  days. 

Mr.  CATCHINGS.     I  think  they  are  wholly  different. 

Mr.  WALKER.     Not  at  all.     I  beg  the  gentleman's  pardon. 

Mr.  CATCHINGS.  At  that  time  we  had  about  $16  per  capita, 
and  that  included  $200,000,000  of  State-bank  notes;  and  they  were 
absolutely  essential  in  the  transaction  of  interstate  business,  by 
reason  of  our  then  limited  banking  facilities,  for  they  were  limited 
in  those  days.  When  these  State  notes  would  go  away  temporarily 
from  home  it  became  necessary  that  this  brokerage  or  discount 
should  be  paid.  But  I  think  I  am  entirely  within  the  limit  of 
truth  when  I  state  that  by  natural  law  the  discount  amounted  to 
merely  the  cost  of  ordinary  bank  exchange. 

Mr.  WILLIAMS  of  Mississippi.  I  do  not  wish  to  interrupt  my 
coUeagiie,  but  I  ask  him,  is  it  not  that  we  need  something  that  will 
take  the  place  of  the  national-bank  currency  in  the  rural  districts 
and  answer  the  same  xHirpose? 

Mr.  CATCHINGS.     In  lieu  of  bank-deposit  credits. 

Mr.  WILLIAMS  of  Mississippi.     That  is  it  precisely. 

Mr.  WILLIAM  A.  STONE.  If  you  give  the  national  banks  the 
same  inducements  to  do  business  in  your  localities  as  you  would 
the  State  banks,  what  preference  would  there  be  in  having  the  or- 
ganization of  a  State  bank?  Is  it  not  a  distinction  without  a  differ- 
ence?   Is  it  not  a  myth? 

Mr.  CATCHINGS.  I  have  tried  in  my  feeble  way  to  show  that 
the  notes  of  State  banks,  having  only  local  functions,  would  be 
used  absolutely  in  the  neighborhood  of  their  issuance. 

Mr.  WALKER.  Because  it  stays  at  home,  what  has  that  to  do 
with  its  value? 

Mr.  CATCHINGS.  For  the  use  of  the  people  in  the  neighbor- 
hood in  which  it  is  issued  it  would  be  a  gi-eat  deal.  It  is  a  diffi- 
culty which  you  gentlemen  from  the  East  can  not  understand. 

Mr.  DINGLEY.  Would  it  stay  at  home  unless  it  was  discount 
money? 

Mr.  CATCHINGS.     Certainly,  it  would  stay  at  home. 

Mr.  DINGLEY.  The  supplies  must  be  bought  in  some  of  the 
distributing  centers.  Can  not  you  see  that  in  that  event  the  local 
money  is  sure  to  be  brought  to  the  broker  for  payment? 

Mr.  CATCHINGS.  No;  it  is  not  necessarily  so.  If  I  had  not 
been  interrupted  awhile  ago  I  think  I  would  have  saved  the  neces- 
sity for  some  of  these  qxiestions. 

I  was  about  to  say  that  in  1861  we  had  $16  per  capita  in  this 
1743 


26 

country.  %m\  that  inclndetl  l^^OO.OOO.OOO  of  State-bank  notes.  Now, 
we  have  to-day  in  this  country  about  $:j3  or  $34,  all  of  which  may 
be  spolcen  of  as  fixed  currency. 

Mr.  BLACK  of  Georgia.     iSTot  .$34. 

Mr.  CATCHINGrS.  I  am  speaking  of  the  amount  in  the  coun- 
try. I  do  not  mean  per  capita  in  circulation.  Now,  we  have  a 
large  amoiint  of  fixed  or  national  money  with  which  to  transact 
the  interstate  business.  You  can  hardly  conceive  the  conditions 
in  which  State-bank  money  could  find  its  way  from  home. 

In  making  the  exchanges  necessary  to  transact  business  this 
local  money  would  be  left  at  home,  because  remittances  wotdd 
be  made  by  bills  of  exchange  and  paid  in  funds  current  where 
they  go.  If.  for  instance,  in  my  town  of  Vicksburg,  I  desired  to 
make  a  remittance  of  $.5,000  to  New  York  and  had  the  $5,000  in 
notes,  maybe,  of  the  bank  itself,  I  would  not  send  those  notes  to 
New  York,  but  would  take  them  to  the  bank  that  issued  them,  if 
they  were  issued  by  one  of  the  banks  of  that  town,  and  I  would 
purchase  with  these  notes  a  bill  of  exchange  on  New  York,  pay- 
able in  such  funds  as  were  usually  current  there. 

Mr.  HENDRIX.     Siippose  the  bank  had  no  funds  in  New  York? 

Mr.  CATCHINGS.  I  am  supposing  that  every  bank  keeps  its 
deposits  so  that  it  can  draw  its  drafts.  Every  bank  that  I  have 
ever  had  any  acquaintance  with  had  possessed  itself  of  the  power 
to  draw  bills  of  exchange  on  New  York. 

Mr.  OUTHWAITE.     And  the  State  banks  do  it  now. 

Mr.  CATCHINGS.     Certainly. 

Mr.  HENDRIX.  Then  they  must  have  some  other  kind  of 
money  than  that  which  the  gentleman  has  been  describing. 

Mr.  CATCHINGS.     Of  course. 

Mr.  HENDRIX.     How  would  they  get  it? 

Mr.  CATCHINGS.  They  would,  of  course,  as  they  do  now, 
keep  their  deposits  with  their  banlc  correspondents  in  New  York 
or  elsewhere  in  what  I  have  designated  as  fixed  or  national  cur- 
rency. I  can  not  conceive  of  any  condition  by  which  these  notes 
would  go  away  from  home. 

Mr.  CANNON  of  Illinois.  If  my  friend  will  allow  an  interrup- 
tion at  this  point,  I  Avill  say  that  I  am  a  little  older  than  my  friend, 
and  I  remember 

Mr.  CATCHINGS.  Before  my  friend  proceeds  I  wish  the  com- 
mittee to  remember  that  he  lived  in  the  ^-ery  storm-center  of  Mold- 
cat  money.  [Laiighter.]  I  do  not  come  from  the  home  of  wild- 
cat money.     Our  Soiithern  banks  were  good. 

Mr.  CANNON  of  Illinois.  Oh,  there  were  good  banks  in  the 
West  in  those  days;  the  State  Bank  of  Indiana,  for  instance,  whose 
bills  were  among  the  best  money  in  the  country;  but  it  is  a  fact 
that  all  over  Indiana  and  Illinois  the  Georgia  money,  the  wild-cat 
money,  was  circulated;  it  was  sent  as  far  from  home  as  possible, 
and  it  was  the  first  money  to  circulate  to  the  exclusion  of  the 
notes  of  the  Bank  of  Indiana.  Now,  1  ^^n.]l  ask  my  friend  in  good 
faith  whether  he  does  not  think  that  with  banks  in  forty-four  States 
issuing  money  it  is  very  likely  that  the  cheapest  money  would  go 
first? 

Mr.  CATCHINGS.  Oh,  no.  That  notion  about  cheap  money- 
driving  out  good  money  has  no  earthly  connection  with  banks  of 
issue.  Gentlemen  persist  in  confusing  this  question  with  what  is 
1743 


27 

called  Gresham's  law,  although  that  law  refers  only  to  legal-ten- 
der money — money  of  the  nation.  No  bad  bank  note  would  ever 
drive  out  a  gold  dollar,  but  the  gold  dollar  would  drive  out  the 
bank  note. 

Mr.  WILLIAM  A.  STONE.  If  you  would  strike  out  of  your  bill 
the  proposition  to  rehabilitate  State  banks  and  leave  the  business 
with  the  national  banks,  those  existing  and  those  which  might  be 
organized  hereafter,  would  not  that  benefit  you  just  as  much  as 
your  proposed  local  banks? 

Mr.  CATCHINGS.  Well,  Mr.  Chairman,  I  have  gone  over  that 
question  so  thoroughly  that  I  do  not  feel  that  I  could  add  much 
to  what  I  have  already  said.  Besides,  I  observe  that  it  is  about 
time  to  bring  my  remarks  to  a  close. 

Several  Members.     Go  on. 

Mr.  WILLIAM  A.  STONE.  You  have  made  them  so  interest- 
ing that  we  want  you  to  continue. 

Mr.  CATCHINGS.  My  friend  is  very  kind  to  say  so.  I  have 
spoken  with  great  earnestness  on  this  subject  because  I  feel  great 
interest  in  the  question.  I  feel  that  we  ought  to  find  some  means 
by  which  the  great,  the  unnatural  burden  under  which  our  Treas- 
ury is  resting  to-day  should  be  taken  from  its  shoulders.  And, 
inasmuch  as  I  have  satisfied  myself  at  all  events  that  it  is  out  of 
the  question  to  talk  about  a  bill  which  shall  retire  these  legal  ten- 
ders without  putting  something  in  their  place,  I  have  come  to  the 
conclusion  that  this  bill  of  Mr.  Carlisle's  is  a  long  step  in  the 
direction  of  attaining  the  ultimate  cancellation  of  all  these  legal 
tenders  and  the  relief  of  the  Government  from  the  obligation  of 
issuing  or  redeeming  money,  a  thing  which,  by  the  very  nature 
of  its  constitution,  it  is  unfitted  to  do. 

As  to  the  deposit  of  30  per  cent  of  greenbacks,  while  it  is  wholly 
unnecessary  from  a  scientific  point  of  view,  and  while  I  believe 
that  the  notes  of  these  banks  would  be  absolutely  good  without 
that  deposit  or  the  guaranty  of  the  Government,  still  I  recognize 
the  fact  that  we  must  not  travel  too  rapidly,  and  that  when  we 
tell  the  people  that  we  are  taking  away  the  bond  deposit,  although 
it  never  was  of  the  slightest  consequence  to  them,  since  the  Comp- 
troller's report  shows  that  if  there  had  been  no  bonds  deposited  as 
security,  and  the  only  security  had  been  the  first  lien  on  assets 
and  the  stockholder's  liability,  the  Government  would  only  have 
lost  in  the  redemption  of  notes  from  the  beginning  of  the  system 
until  now  about  $1,000,000,000,  we  must  be  able  to  tell  them 
that  we  are  piitting  something  in  its  place  in  the  form  of  a  Gov- 
ernment guaranty.  Instead  of  100  per  cent  guaranty  by  the 
Government,  we  propose  30  per  cent;  for  this  greenback  deposit 
simply  means  that  the  Government  will  stand  responsible  for 
the  redemption  of  30  per  cent  of  the  notes  issued,  just  as  the  bond 
deposit  means  that  it  will  stand  responsible  for  the  redemption  of 
every  one  of  them. 

Mr.  PENCE.  As  I  understand  the  suggestion  of  thegcntleman, 
it  is  that  the  Government  will  stand  behind  the  greenbacks  with 
its  gold. 

Now,  as  I  understand,  we  have  to-day  in  round  numbers  $346,- 
000,000  of  greenbacks  based  on  §100,000,000  of  gold  reserve,  and 
also  $150,000,000  of  Treasury  notes  base'd  upon  the  same  gold  re- 
serve, according  to  the  pretension  made  here  this  afternoon. 
1713 


28 

Then  we  have  in  ronnd  numbers  $500,000,000  based  upon  that 
gold  reserve.  Now,  under  this  bill  we  pr(>i)ose  to  make  that  $500,- 
000.000  the  basis,  at  the  rate  of  1  to  3,  of  a  bank  currency 

Mr.  CATCHINGS.     Oh,  we  do  not  do  anything  of  the  sort. 

Mr.  PENCE.  If  the  entire  outstanding  body  of  greenbacks  and 
Treasury  notes  should  be  used  as  a  basis  for  banking  circulation 
under  this  bill,  wotild  not  that  be  the  effect? 

Mr.  CATCHINGS.  If  people  organized  banks  simply  for  fun, 
and  not  for  the  purjiose  of  doing  business,  you  might  tind  such  an 
amotmt  of  circulating  notes  taken  out  as  would  require  the  de- 
posit of  the  whole  $500,000,000  of  greenbacks  and  Treasury  notes. 
But  I  consider  the  gentleman's  question  as  absolutely  irrelevant 
because  no  possible  use  could  be  made  of  that  amount  of  paper 
money  in  this  country,  for  banks  would  not  organize  and  takeout 
circulating  notes  except  to  the  extent  that  it  might  be  profitable 
for  them  to  do  so. 

Mr.  PENCE.  I  hope  the  gentleman  will  not  regard  me  as  hav- 
ing a  disposition  to  ask  irrelevant  (luestions 

Sir.  CATCHINGS.  Oh,  I  did  not  mean  any  offense  to  the  gen- 
tleman. 

Mr.  PENCE.  Now,  if  the  banks  did  not  take  out  circulation  to 
that  extent,  there  would  still  be  left  some  portion  of  these  green- 
backs and  Treasury  notes  which  might  be  used  for  the  purpose  of 
draining  the  Treasury  of  its  gold. 

Mr.  CATCHINGS.  I  think  my  friend  can  not  have  been  listen- 
ing to  my  remarks. 

Mr.  PENCE.     I  was  listening  to  every  word  the  gentleman  said. 

Mr.  CATCHINGS.  I  made  the  statement  in  the  beginning  that 
this  bill  "vvas  not  intended  to  be  a  perfect  measure  of  relief;  that 
there  could  be  no  complete  relief  except  the  cancellation  and  ex- 
tinguishment of  all  these  legal  tenders.  But  the  conditions,  as  I 
stated,  are  siich  that  that  result  can  not  be  accomi)lished,  and  this 
bill  is  the  only  thing  leading  in  that  direction  which  we  could 
hope  to  enact  into  a  law. 

Mr.  WILLIAM  A.  STONE.  I  trust  the  gentleman  from  Mis- 
sissippi will  say  something  in  regard  to  the  difficulty  which  it 
seems  to  me  might  arise  from  the  want  of  uniformity  in  State 
legislation  ^vith  reference  to  the  issues  of  the  State  banks.  Here 
is  a  measure  reciuiring  a  deposit  of  30  per  cent  of  the  amount  of 
the  bank  circulation  with  some  recognized  officer  of  the  State. 
Now.  it  is  possible  and  probable  that  the  States  may  differ  with 
respect  to  the  taxation  imposed  on  the  State  banks  and  as  to  the 
system  of  impounding  the  securities.  In  view  of  these  circum- 
stances, may  not  a  bank  in  one  State  carry  on  its  business  under 
mucli  more  favorable  conditions  than  a  bank  in  another;  and  ^\^ll 
not  this  tend  to  affect  the  circulation  and  its  security? 

Mr.  CATCHINGS.     I  can  hardlv  understand  how  that  could  be. 

Mr.  WILLIAM  A.  STONE.  What  assurance  will  any  note 
holder  have  that  there  will  be  a  uniform  measure  of  security 
behind  these  State-bank  issues? 

Mr.  CATCHINGS.  My  friend  will  certainly  understand,  if  he 
will  read  this  bill  thouglitfully,  that  the  seciirity,  at  all  events, 
will  be  at  least  equal  to  and  of  the  same  kind  as  that  furnished  to 
the  note  holder  of  the  national  banks.  While  some  States  might 
exact  greater  security,  none  could  exact  any  less.    So  that  I  say 

1743 


29 

in  any  event  the  holder  of  a  note  of  a  State  bank  would  be  secured 
just  as  amply  and  in  fact  in  precisely  the  same  way  that  the  holder 
of  a  note  of  a  national  bank  would  be. 

Mr.  WILLIAM  A.  STONE.  The  States  wiU  not  animpose  the 
same  taxation. 

Mr.'HENDRIX.  If  my  friend  from  Mississippi  [Mr.  Catch- 
INGS]  is  correct  in  his  statement,  why  shotild  the  national-bank 
note  have  any  legal-tender  quality  whUe  the  State-bank  note  has 
none? 

Mr.  CATCHINGS.  I  will  say  to  my  friend  that  if  I  could  pass 
a  law  in  a  form  which  would  exactly  suit  myself  I  would  take 
away  from  the  national-bank  note  its  legal-tender  quality.  If  that 
were  done,  I  think  it  would  be  better  and  more  useful  money. 
Personally  I  would  never  agree  that  the  note  of  any  bank  should 
have  any  legal-tender  quality. 

Mr.  HENDRIX.     I  agree  with  the  gentleman. 

Mr.  NEWLANDS.  I  understood  the  gentleman  from  Missis- 
sippi to  say  a  few  moments  ago  that  it  was  the  duty  of  the  Gov- 
ernment to  maintain  all  its  obligations  on  a  par  with  gold;  in 
other  words,  to  make  all  Government  obligations  gold  obhgations. 
The  purpose  of  this  bill,  as  I  understand,  is  to  prevent  the  drain- 
age of  gold  from  the  Treasury  by  the  redemption  of  United  States 
notes  and  greenbacks.  But  there  are  about  $500,000,000, 1  believe, 
of  silver  certificates  outstanding. 

Mr.  CATCHINGS.     About  $337,000,000. 

Mr.  NEWLANDS.  Three  hiindred  and  thirty-seven  millions. 
Now,  do  I  understand  the  gentleman  from  Mississippi  to  main- 
tain that  the  silver  certificates  would  be  redeemable  in  gold? 

Mr.  CATCHINGS.  Not  at  all.  I  have  not  said  anything  of 
the  kind.     The  gentleman  has  misunderstood  me. 

Mr.  NEWLANDS.  Tlie  gentleman  connected  them  with  the 
gold  withdrawn  from  the  Treasury 

Mr.  CATCHINGS.  I  connected  them  with  the  burden  on  the 
Treasiiry  in  this  way:  These  silver  certificates  are,  as  the  gentle- 
man knows,  receivable  for  customs  duties,  and  to  the  extent  that 
they  are  received  for  customs  duties  I  stated  that  it  kept  gold  out 
of  the  Treasury.  So  they  perform  as  a  matter  of  fact  as  harmful 
work  to  the  Treasiiry  as  the  legal-tender  notes  do  as  far  as  the 
gold  is  concerned.  What  is  the  difference  between  money  which 
takes  gold  out  of  the  Treasury  and  money  which  keeps  gold  from 
going  into  the  Treasury?  Why,  we  are  like  an  army  ambushed 
all  around.  We  have  notes  that  take  away  gold  from  the  Treas- 
ury and  others  that  keep  it  from  going  in. 

Mr.  NEWLANDS.  Would  it  not  follow,  then,  from  the  argu- 
ment of  the  gentleman,  as  a  matter  of  necessity,  that  in  order  to 
complete  the  protection  of  the  Treasury  it  would  be  necessary  to 
retire  the  silver  certificates  as  well  as  the  legal  tenders? 

Mr.  CATCHINGS.     Not  at  all. 

A  Member.    Where  is  the  distinction? 

Mr.  CATCHINGS.  Why,  I  have  already  stated  that  one  of  the 
most  attractive  features  of  Mr.  Carlisle's  bill  is  the  proposition  it 
embodies  to  retire  all  notes  under  the  denomination  of  $10, 
whether  national-bank  notes,  greenbacks,  or  Treasui-y  notes,  for 
the  purpose  of  leaving  the  field  open  to  a  monopoly  of  circulation 
as  to  notes  under  that  denomination  by  silver  dollars  and  silver 
1743 


30 

certificates.  I  have  said  that  if  these  notes  were  withdi-awn  and 
were  replaced  by  the  silver  certificates  all  the  silver  certificates 
except  about  §1!), 000, 000  would  find  occupancy  in  that  field;  and 
that  they  would  take  it  I  think  can  not  be  questioned  by  any- 
body, because  it  is  a  recognized  fact  that  the  country  requires 
about  that  anaount  of  small  notes,  or  else  they  would  not  be  kept 
out  at  all. 

]\Iy  friend,  of  course,  understands  that  otir  small  notes  now  are 
only  used  where  they  are  nectvssary,  because  they  are  inconvenient 
in  large  transactions;  and  the  fact  that  we  keej)  that  large  amount 
of  small  notes  in  circulation  among  our  people  is  evidence  of  the 
fact  that  the  business  of  the  coimtry  requires  that  amount  for  its 
transaction.  Therefore,  it  is  safe,  I  think,  to  assume  that  the  field 
as  to  small  notes  will  be  filled  by  the  silver  certificates  and  the 
silver  dollars. 

Mr.  NEWLANDS.  But  can  not  the  State  banks  also  issue  the 
small  notes? 

:\Ir.  CATCHTNGS.  That  provision  is  made  in  the  bill.  I  have 
not  the  slightest  objection,  however,  if  it  is  deemed  desirable  to 
do  so,  or  if  there  be  any  objection  to  it.  to  strike  it  out  altogether. 
It  is  not.  in  my  judgment,  very  material  to  enable  the  State  banks 
to  perform  this  function.  In  some  localities,  undoubtedly,  it  would 
be  a  matter  of  very  great  convenience  to  the  people;  but  for  my- 
self I  make  no  point  upon  it  and  wUl  have  no  objection,  if  it  is 
deemed  desirable,  to  strike  it  out  of  the  bill.  That  would  give 
the  entire  field  to  silver  dollars  and  the  silver  certificates. 

Mr.  NEWLANDS.  I  understand  the  bill  provides  that  the 
banks  in  the  issuance  of  the  notes  may  declare  them  payable  in  gold. 

Mr.  CATCHEISrGS.  That  was  the  provision  inserted  for  the 
benefit  of  you  millionaires  in  California,  you  silver  men,  who 
make  your  obligations  always  pavable  in  gold.     [Laughter.] 

]Mr.  NEWLANDS.  What  is  the  difference,  I  ask  the  gentle- 
man  

:\Ir.  CATCHINGS.    It  is  a  little  "meandering."     [Laughter.] 

Mr.  NEWLANDS.  Assuming  that  the  banks  make  the  notes 
payable  in  gold 

^Ir.  CATCHINGS.  You  understand,  of  course,  that  that  is  in 
the  present  banking  law. 

Mr.  NEWLANDS.  But  we  are  passing  a  measure  here  to  rem- 
edy everything.  Now,  I  say  suppose  the  banks  in  the  great  money 
centers  make  their  notes  redeemable  in  gold,  and  the  other  banks 
in  the  States  make  them  redeemable  in  gold  or  silver,  and  make  a 
practice  of  redeeming  in  silver,  will  that  not  of  itself  attach  dis- 
credit to  the  banks  issuing  notes  redeemable  in  either  gold  or  sil- 
ver, and  result  in  having  paper  throughout  the  country  part  of 
which  is  good  and  part  at  a  discount? 

Mr.  CATCHINGS.  I  think  not.  I  think  my  friend,  who  is 
always  qiiite  interesting,  has  made  a  rather  unusual  appeal  to  his 
imagination  in  getting  up  that  question.  I  do  not  think  he  need 
have  the  slightest  apprehension  that  any  bank  outside  of  Califor- 
nia or  outside  of  what  I  might  call  the  silver  States  is  going  to  make 
its  obligations  payable  in  gold.  Why  should  they  wish  to  do  so 
and  imx)Ose  that  specific  burden  upon  themselves? 

Mr.  NEWLANDS.  Does  not  the  gentleman  know  that  all  loan 
and  trust  companies  have  been  di-ifting  in  that  direction;  that  the 
1743 


31 

obligations  in  the  shape  of  promissory  notes  and  bonds  of  this 
country  are  gradually  di-ifting  into  gold  obligations  exclusively? 

Mr.  CATCHINGS.     But  those  are  not  bank  notes. 

Mr.  NEWLANDS.  Very  well,  but  will  not  that  practice  extend 
to  bank  notes?  Will  not  one  bank  seek  to  make  its  notes  better 
than  those  of  another  by  paying  them  in  gold  and  thus  discredit- 
ing the  others? 

Mr.  CATCHIlSrGS.  I  will  answer  my  friend's  question  by  ask- 
ing him  one.  If  that  is  so,  why  have  not  some  banks  under  the 
present  law  been  making  their  notes  payable  in  gold? 

Mr.  NEWLANDS.  Recollect  this  practice  of  making  various 
obligations  throughout  the  country  redeemable  in  gold  has  only 
been  a  practice  of  the  last  two  or  three  years. 

Mr.  CATCHINGS.     My  friend  is  mistaken  about  that. 

Mr.  NEWLANDS.    And  a  gi'adually  increasing  practice. 

Mr.  CATCHINGS.  My  friend  is  mistaken  about  that.  I  have 
written  many  a  gold  mortgage  fifteen  or  twenty  years  ago. 

Mr.  WALKER.  Why,  certainly;  and  should  they  not  have 
the  right  to  do  it  if  they  want  to? 

Mr.  CATCHINGS.  But  that  has  nothing  to  do  with  this  case. 
1  think  it  is  hardly  a  practical  question. 

Mr.  Chairman,  I  am  very  much  obliged  to  gentlemen  for  listen- 
ing to  me  so  patiently,  and  I  will  not  impose  upon  their  good 
nature  any  longer. 
1743 


Bimetallism  Promised  by  the  Ecpiiblioaii  Party.    No 
Siuffle  Oold  Standard. 


SPEECH 


HON.    WILLIAM    E.    CHAXDLEE, 

OF  NEW  HAMPSHIRE, 

In  the  Senate  of  the  United  States, 

Wednesday,  February  20,  1895. 

The  Senate  having  under  consideration  the  following  resolution,  submitted 
February  19, 1895,  by  Senator  Wolcott,  of  Colorado: 

Resolved,  That  it  is  the  sense  of  the  Senate  that  the  welfare  and  prosperity 
of  the  United  States  require  the  enactment  of  a  law  for  the  free  and  unlimited 
coinage  of  silver  at  the  ratio  of  16  to  1 — 

Mr.  CHANDLER  said: 

Mr.  President:  In  deference  to  the  prevailing  opinion  of  New 
England,  and  because  it  may  be  unwise  to  open  our  own  mints 
to  the  unlimited  coinage  of  silver,  without  concurrent  action  upon 
the  part  of  other  great  nations,  I  shall  vote  against  the  resolution 
offered  by  the  Senator  from  Colorado. 

But  I  very  much  regret  that  I  can  not  also  now  vote  in  favor  of 
some  affirmative  measure  in  the  direction  of  bimetallism,  to  pro- 
mote which  the  Republican  party  is  sacredly  pledged  by  the 
promises  of  its  national  convention  in  1892,  which,  as  yet,  noth- 
ing has  been  done  to  redeem. 

Bimetallism,  as  I  understand  it,  is  the  use  of  gold  and  silver  as 

money  metals,  each  equally  entitled  to  coinage  as  money  in  the 

mints  of  the  bimetallic  nations.    It  is  the  principle  of  bimetallism 
1811  1 


that  with  such  coinage  at  a  ratio  established  by  a  consensus,  there 
can  be  no  inferiority  of  either  metal  to  the  other.  Each  will 
always  be  of  the  same  comparative  value  with  the  other.  As  neither 
is  of  gi-eat  intrinsic  value,  the  market  value  of  both  is  derived  from 
their  use  jointly  as  money  metals,  and  neither  can  depreciate  in 
value  as  long  as  both  are  used  as  money.  The  discoverers  and 
producers  of  either  metal  in  unusual  quantities  are  entitled  to  the 
profits  of  their  enterprises  and  labors.  At  one  time  the  propor- 
tion of  new  gold  may  increase,  at  another  time  that  of  new  sil- 
ver may  preponderate;  but  as  time  runs  the  alternations  will  bal- 
ance each  other,  and  all  the  gold  and  silver,  being  the  coined 
money  of  the  world,  will  forever  measure  all  the  world's  values. 
This  is  the  bimetallism,  to  secure  and  preserve  which  the  Repub- 
lican party  is  bound,  and  from  the  support  of  which  no  Republi- 
can can  be  released  without  the  utterance  of  a  new  national  con- 
vention of  his  party. 

Bimetallism  has  been  attacked  and  destroyed  by  England,  the 
g^eat  creditor  nation  of  the  world.  England's  demonetization  of 
silver  has  been  up  to  this  time  acquiesced  in  by  the  United  States, 
It  is  folly  to  say  that  silver  is  a  money  metal  merely  because  we 
use  it  for  subsidiary  coinage  and  maintain  the  parity  with  gold  of 
our  present  limited  quantity  of  coined  silver  dollars.  As  long  as 
our  mints  are  absolutely  closed  to  the  coinage  of  silver  bullion  we 
shall  be  fast  approaching  a  single  gold  standard;  if  we  have  not 
already  reached  it.  Gold  monometallism  is  our  destiny  if  some 
affirmative  action  in  another  direction  is  not  soon  taken. 

Against  the  adoption  for  America  of  the  single  gold  standard  it 
is  my  duty  to  speak  and  act,  in  accordance  with  the  pledges  of  my 
party  and  with  the  interests  of  the  great  mass  of  the  American 
people,  debtors,  producers,  and  property  owners. 

It  may  be,  it  doubtless  is,  the  pathway  of  strength  and  honor 

for  the  National  Government  to  pay  all  its  existing  obligations  in 

gold.    But  that  is  a  small  branch  of  the  pending  question.    It  is 

agreed  by  all  ^Titers  on  political  economy  and  the  question  of 

money  that  a  diminution  in  the  quantity  of  the  metallic  money 

causes  an  appreciation  of  the  remainder  and  produces  a  faU  in 
18^ 


the  prices  of  all  commodities.  If  there  are  $4,000,000,000  of  gold 
and  $4,000,000,000  of  silver  in  existence,  constituting  together  the 
world's  measure  of  value,  and  one-half  the  quantity  is  abandoned 
as  a  money  metal  and  measure  of  value,  the  other  half  appreciates 
in  value  and  destruction  comes  to  the  values  of  all  other  property, 
while  the  debts  of  the  world  remain  unreduced.  This  brings  in- 
solvency to  debtors  and  ruin  to  business  enterprises. 

To  such  a  fate  the  people  are  now  exposed.  To  what  extent 
other  causes  than  the  demonetization  of  silver  have  brought  about 
the  distressing  condition  in  which  this  country  has  found  itself 
for  the  last  two  years  it  is  not  clear.  But  I  can  not  avoid  the  con- 
clusion that  the  adoption  of  the  single  gold  standard  has  helped  to 
produce  the  impending  calamity.  It  is  not,  as  I  have  said,  a  ques- 
tion of  paying  the  public  debt,  or  whether  it  shall  be  paid  in  gold 
or  in  silver.  That  debt  is  insignificant  comi^ared  with  the  thousands 
of  millions  of  obligations  which  weigh  with  crushing  force  upon 
the  millions  of  our  fellow-countrymen,  equal  to  or  greater  in 
amount  than  tliey  were  a  few  years  ago,  while  in  the  meantime 
half  the  world's  money  has  been  stricken  from  existence,  and  the 
prices  of  all  property,  from  which  debtors  must  derive  the  means 
to  make  their  payments,  have  gone  down  one-half. 

If,  with  the  fall  of  one-half  in  the  prices  of  commodities,  the 
debts  of  the  people  were  also  scaled  down  one-half,  we  might  pos- 
sibly go  forward  on  a  single  gold  standard  to  revived  business 
prosperity.  But  ^^^th  the  debts  and  the  prices  as  they  now  are, 
widespread  bankruptcies  are,  in  my  belief,  to  blight  and  curse  the 
country  in  the  months  and  years  now  close  at  hand,  and  the  re- 
turn of  full  prosperity  will  long  be  deferred. 

Therefore,  the  people  of  this  Republic  will  vote  against  the 
single  gold  standard.  The  time  is  approaching  when  it  will  be 
necessary  for  the  Republican  party  to  present  some  affirmative 
measures  of  bimetallism.  What  those  measures  shall  be  must  be 
determined  by  the  wisest  members  of  that  party,  which  is  soon 
to  control,  by  an  overwhelming  majority,  the  popular  branch  of 
Congress.  The  bimetallism  we  have  promised  must  be  reached, 
or  steps  toward  it  must  be  taken,  or  the  American  voters  will 

1841 


decide  between  gold  monometallism  as  the  one  alternative  and 
silver  monometallism  as  the  other.  It  is  useless  to  shut  our  eyes  to 
the  fact  that  the  debtors  are  more  numerous  than  the  creditors,  and 
that  the  citizens  who  want  prices  of  property  to  go  up  outnum- 
ber those  who  want  them  to  remain  as  they  now  are.  Bimetallism 
has  been  promised  to  the  people  of  this  country.  They  wait  with 
much  impatience  for  the  fulfillment  of  the  pledges  solemnly  made 
by  both  political  parties. 

1£41 


CONGRESSI^^ 


h 
payment  of  the  loan.    It  would  be  perfectly  proper  and  entirca; 
safe  for  the  bank  to  issue  a  note  of  its  own  based  on  the  propeii  ] 
which  through  its  assistance  is  in  process  of  creation.    By  meapfa 
of  that  note  the  bank  could  make  a  further  loan  to  the  miller  w  1: 
will  grind  the  wheat  or  to  the  carrier  who  will  transport  t 
maniTfactured  article,  enabling  each  to  discharge  with  greaV  ' 
efficiency  his  part  in  the  general  scheme  of  production.     Whfet 
a  bank  enjoys  this  power  of  issue,  and  exercises  it  prudently. m 
is  able  to  make  capital  effective  for  a  greater  development  of  tra^a 
for  a  wider  spread  of  industry.     Credit  knits  men  closeb^  togethte 
it  makes  each  man's  product  a  stimulus  to  the  enterprise  and  tie 
industry  of  every  other  producer,  and  the  G-overnment  should  pi? 
no  restraint  upon  a  force  so  beneficent  as  this  except  the  requi ; 
ment  that  it  shall  be  exercised  within  the  limits  of  prudence.     Li 
every  great  force  credit  may  be  abused  and  its  abiise  leads  to  ci 
astrous  results.     Siipervision  by  the  Government  is  a  check  ,u 
fraud  and  recklessness  and  it  should  be  vigilantly  exercised.     Ijie 
the  Government  has  no  right  to  interfere  with  this  branch  of  tr; 
further  than  to  prevent  any  bank  from  defrauding  the  public 
false  pretenses  through  its  paper  circulation.     No  conditif,  a 
should  be  imposed  upon  any  device  to  economize  money  except  t'l 
there  should  be  actual  property  behind  every  note  sent  into  \st 
channels  of  trade  to  float  our  commerce  and  broaden  our  industji: 
[Applause.]  tt 

My  friend  from  Tennessee  [Mr.  Cox]  applauds  that  centime  n. 
When  my  friend  smiles  I  feel  that  the  clouds  have  passed  fr<f 
the  sun  and  that  I  am  sailing  under  favorable  skies.  d 

Mr.  COX.  I  am  very  glad  the  gentleman  is  gratified  by  ai , 
thing  I  do. 

Mr.  COCKRAN.  I  have  never  met  my  friend  that  the  mc^^ 
ing  was  not  a  source  of  pleasure.  One  of  my  deepest  regrets  g 
leaving  this  House  is  the  fact  that  my  association  with  him  mij-, 
be  severed.  t;f 

Mr.  HUTCHESON.  Let  me  ask  the  gentleman  thi«  questi^ 
You  say  the  banks  should  be  permitted  to  issue  a  note  on  ^^■ 
note  of  a  farmer.  Now,  why  should  the  note  of  a  bank  be  sa:,-\^ 
tified  as  money  any  more  than  the  note  of  the  farmer?  [^ 

Mr.  COCKRAN.  The  gentleman  puts  a  question  which  is  \. 
unimportant  to  this  discussion.  I  do  not  think  any  commerq- 
paper  "  should  be  sanctified  as  money  "except  so  far  as  comme 
will  accept  it.  If  the  gentleman  will  favor  me  with  his  attent,^, 
he  will  learn  that  I  deny  the  right  of  the  Government  to  in'j-,, 
fere  in  any  way  with  the  money  of  the  country  except  to  coin  sc^ 
particular  metal,  some  one  product  of  human  industry  by  whg^, 
custom  has  declared  that  all  other  commodities  should  be  me, 
ured.  I  have  always  regarded  the  hand  of  the  Government^-,, 
the  issue  of  paper  money  as  a  destructive  hand.  Banking,  in  g' 
its  features,  is  but  an  economy  in  the  use  of  money,  and  an  incre^, 
in  the  amount  of  productive  capital.  I  have  stated  that  before  8|, 
I  repeat  it  now.  I, 

Mr.  HUTCHESON.  Will  the  gentleman  allow  me  to  elabor., 
that  now?  ,'  j 

Mr.  COCKRAN.  I  am  afraid  that  if  I  do  allow  the  gentleuj 
to  elaborate  it  this  speech  \\dll  run  into  next  week.  ,, 

Mr.  HUTCHESON.     The  only  thing  is  this 

Mr.  COCKRAN.  If  it  be  the  only  thing  I  will  let  it  go.  \i 
not  expect  to  cover  this  whole  subject,  and  if  only  one  featurtj 
it  be  overlooked  I  shall  feel  well  satisfied. 

Mr.  HUTCHESON.  Under  the  same  tax  which  you  imi,^ 
you  prevent  the  farmer  from  having  siTch  currency?  ^^ 

Mr.  COCKRAN.  My  dear  sir,  I  am  opposed  to  all  tax  on  c.j" 
rency  as  such. 

Mr.  HUTCHESON.    Exactly.  ., 

"IVTr.  COCKRA'NT      J  i-pi  ende?ivorip_^  to  show. that  if  is  9,c  ii 


(1^0 n|r ess i anal  Sler0r(l 


FIFTY-THIHX)   COISTGRESS,  THIRD   SESSIOIST. 


The  Currcjicy. 
SPEECH 

H0\     W     BOlTRIvE    COCKRAN 

of  new  \urk 

In  the  House  of  Refke&entatives 


Sat 


•  Ja 


]|  appeal,  then,  to  gentlemen  o 


anjong  those  charg  d 
Ul     nthtion  would  t 


of  a  d  ngerous  finan 

;d  an    as  indef  n   b  e  as  pol  ti  a 

he  b       n     walls  of  a    row  led 

hfl  beds  de  of  suffer  ng  and 


he  human  mind  has 
hter] 
kind  has  a   vava  loved  m> 


mi     h  n  1 

unit    n  doubt   if  i 

Dur  ng  recent  >ei 


ded  by  tur-nd  rhetonc  that  who- 
d  he  key  o  m  a  e  ea  was  a  ej  el  as  a 
i      and  mystihed  i  is     e  na  n    an      f 

d   h  aft  ly  ou  1     trns  and  f  m  ula> 


kahest 
rdof 


pt  to  look  back 

v^     p  ty  on  the  f,eneration<*  wh    b  acco  ded  occult  powers  to 
J  istTodamus   and  were  av.ed  by  the    [ua  ker  es  of  Ca^  ostro 


ut  pr< 
pa*al  2 


>  1a        \\  1       1  r 


and  beyond  the  control  o 


Ike 

e  of 
ff  the 


# 


congrEvSsional  record. 


f'ai 


1  have  prosperity 

Mr.  COCKRAN.  Mr.  Cbaiiman.  I  did  uot  intend  to  yield,  bot 
the  centlemau  from  Missouii.  always  illumines  every  questi- 
thatlie  examines,  even  when  ht;  does  not  int'-nd  to  nnveil  tr-  "' 
liKht  of  his  intellect.  [Laughter.  |  I  thank  him  for  hia  int 
tion.  I  challenge  the  gentlumim  from  Missouri  to  point  ont  , 
word  of  mine  which  prophesied  that  the  repeal  of  the  Sberm}^,, 
law  would  bring  prosperity  t*t  this  enuntry.  It  is  the  provin*. 
of  the  quack  and  the  i-harlatan  to  prett'nd  that  prosperity  can  1, 
created  by  legislation;  that  any  party,  faction,  or  leader  possesseSj , 
secret  by  wffich  wealth  can  be  produced  through  any  other  fore 
than  the  industry  of  man. 

I  do  not  propose  to  begin  this  disi 


r  than  my  fello' 


,  but  to  8t 
r  mysteric 


on  by 


to  be  bfttr 
with  the  3eclaratiC)n 

r  diJE&cult  in  politioal 


There  is  nothing  in  the  laws  governing  the  trade  of  a  counti  ^ 
different  from  the  laws  which  govern  the  trade  of  an  individual 
for  the  commerce  of  a  country  is  hut  the  commerce  of  the  inc 
viduala  that  compose  if.     I  d-  iii>t  .-laim  to  have  discovered  ai 
new  principle.     Wh-ii  fl.- m.-rninl  r  ;,„l  t..i,Hli^  tirst  man  that 
the8weatoEhiBbr..ivh^Miin.^liatlii-^l.iv:i<lhiT.-viealc'dtolumand 
allhis posterity  till- wh.. 1-. -.■,, I, .,iin^-l.iw-..\.Tnnn;i.roducti« 
oneinfolliblerule  by  winch  unlu^trial  la-.isj.i-Mty  can  be  achieved. 
[Applause.] 

All  wealth  must  be  created  by  human  toil.  Government 
never  be  a  producer.  It  consumes,  but  it  can  not  create.  What 
gives  it  must  take.  Government  can  not  therefore  be  generous  a 
]ust  at  the  same  time,  for  to  be  generous  to  one  it  must  he  i 
pressive  to  another.  The  government  that  does  equal  and  exi 
justice  to  all,  that  conserves  to  every  man  the  bread  which 
the  sweat  of  his  brow  he  has  kneaded,  is  a  government  has 
upon  the  word  of  God  and  the  law  of  nature;  its  foundations  ajre 


salutary,  its  operations  are 


happened  to  need  a  knife  a 


B  could  have  been  efifected, 


m^ty,  and"  at  the  same  time  had  a  commodity  of  his  own  whi^h 
the  first  producer  needed,  trade  ^°^^"^,[,^'1^2^^^y«7  narrow 
compass,  '  ""     ^~*  *"  """'  '      "       ""''         ' 


Mr.  COCKRAN.    Yes.  i 


'8  argument  is  perfectly  nn- 


contracted  a  dollar's  worth  of  debt  for  the  article  he ,^ 

for  that  dollar,  and  had  to  pay  it,  would  he  have  a  dollar  to  ex- 
change for  the  next  thing  he  wanted  and  at  the  same  time  iatiBfy 
his  debt? 

Mr.  COCKRAN.  The  gentleman,  as  I  understand  him,  aaka 
me  how  one  dollar  can  dischar<ce  and  perform  the  functions  of  two 
dollars  at  the  same  time.  Thti  .luestion  answers  itself,  it  Beems  to 
me.  To  do  all  that  the  gentleman  suggests  the  butcher  would 
need  to  sell  two  beefsteaks  for  two  dollars  instead  of  one  beefsteak 
for  one  dollar^ [Laughter.] 

Mr.  HUTCHESON.    He  would  have  to  get  more  doUars  to 

B  dollar  through  which 

a  k  t    hun  m  another 
n  the  number  of 


ncomprehensible  about  hanks  and  cui-rency,  that  I  r 


The  operation  of  every  dollai 
day— if  the  Hot 


Q  be  illustrated  by  the  operati  m 


:culatea 
B  vnl\  allow  me  to  repeat  here  an  illustrati 
wliicb  I  used  in  discussing  the  repeal  of  the  Sherman  law. 


The  butcher  with  that  same  dollar  purchast 

the  cutlery  store.    The  cutler  goes  to  the  dry -goods  store  and  pi  j. 
chases  a  dollar's  worth  of  fb-y  goods;  the  dry-goods  merchant  ^(  g, 
to  the  stationery  store  and  purchases  a  dollar's  worth  of  atatK  , 
ery;  the  stationei  goes  to  lunch  and  pays  a  doUar  for  a  meal;  t  l„ 
hotel  or  restaurant  keeper  goes  to  a  bookstore  and  buys  a  bo  jk 
for  a  doUar;  the  bookseller  goes  to  a  haberdasher  and  buys  a  d 
lar's  worth  of  neckties;  the  haberdasher  goes  to  the  baker  a 
buys  a  dollar's  worth  of  bread;  the  baker  goes  to  the  grocer 
buys  a  dollar's  worth  of  tea;  and  the  grocer  goes  to  the  wine  ] 
chant  and  buysadollar's  worth  of  wine,  each  or  tbe^je  persons  in  ■ 
making  use  of  the  same  dollar.    Here  we  have  ten  .-m  p  iiuti  ■■[ 
tions  performed  by  that  one  dollar,  and  it  must  !";■!■'■.; 
to  everybody  that  at  the  conclusion  of  the  day  tin  ;■  j-  -i-  i 
exchanged  commodities  equal  to  the  value  o£  ten  i.::  n  ■  i  l^  ■ 


exchange  for  another  beefsteik 


essential  to  motion,  but  thpy  facilit 
trade,  but  ithas  wonderfully  mtr      f 
exchange.    Wheelsareof  intalcultl  1 
to  equipa  car  with  more  than  are  ue 
impede  the  progress  of  the  \ebii.le 
rial.   Money  is  a  most  important 
its  volume  beyond  the  needs  ot 
which  deranges  enterprise  and  i 
profit  in  exchanging  money  a„ 
profit  in  exchanging  coramoditie 
change  com  for  shoes  the  shoemikfi 
which  he  sells  me,  but  the  exchanj,( 
because  it  enables  me  to  obtain  the  sh 


l«aj8  a 

If  lex 

]     tit    n  the  shoes 

..  much  less  than  it 

would  cost  me  to  produce  them     From  what  I  ha%  e  said  the  gen 
tleman  who  has  interrupted  me  vnll  un  ler<;t  ind  that  the  prosper 
ity  of  comjnerce  depends  not  so  much  on  the  volume  of  money  ; 
as  on  ita  soundness;  that  the  excliange  of  commodities  does  not  , 
depend  so  much  on  the  number  of  circulating  wheels  as  on  the  ' 
efficiency  with  which  each  wheel  discharges  its  functions. 


Mr.  LIVINGSTON.    Will  the  gentleman  let 
tbedoable  function  of  money— fixing  values 
of  exchange? 


well  as  the  medium 


1  different  foi 
['■hange  If  it  were  not  ;i  \ 
Throughout  the  wh'  '1' 


ngle  dollar. 


thee .    .        „ 

The  exchange  of  these  commodities  among  these 
would  not  have  been  promoted,  stimulated,  or  inci'ea.bed  in  i 
way  if  there  had  been  three,  four,  five,  or  six  dollars  perfo: 
ine  the  functions  which  that  c 
dollars'  worth  of  commodities 
lar.  sofifty  dollurs-wuitl,  of  L' 


3  dollar  performed.     And  as  tl  j! 
culated  by  that  o"  "  " 


s  1  have  described  s 


I  ■  bt'efsteak  ot  the  butcher  i 


cutler,  bymeans  of  iii\  il^ 
a  beefsteak.  He  ni'iili  il 
beefsteak,  and  thn <\vj.][  :>\' 

the  knife  of  the  cutli-r  wer.^  .-.\.  Ii:iiiui-rl.  At  the  end  of  the  trai 
actions  I  had  the  beefsteak,  the  cutler  had  another  commodity,  a; 
the  butcher  had  a  knife.  Now,  if  there  never  had  been  a  dollar  ^ 
existence,  some  of  those  commodities  would  have  been  exchangei  ■ 
but  the  exchanges  would  not  have  been  so  rapid  or  so  numerou  ' 
The  butcher  would  have  waited  until  the  cutler  needed  a  steaL' 
In  the  fullness  of  time  the  cutler  would  be  compelled  to  porchaj  ' 
meat.    He  would  then  bring  his  cutlery  to  the  butcher's  stor^ 


ranty;  that 


Mr.  COCKRAN.    When  the  gentleman  speaks  of  money  as  fii- 
ig  values  and  aa  a  medium  of  exchance  be  is  really  stating  the 

;  men  have  fixed  the 
1  .ites  at  which  the'; 
iiv  commodity;  that  is 
principle  that  things 
thin;;  are  equivalent  to  each 
other.  The  selection  of  one  commodity  among  the  ^roj^""^^' 
human  labor  as  the  standard  by  which  the  value  r"  "' 
should  be  measured  does  not  in  any  v  -  •  -' 
particular  commodity. 

Water  is  universally  accepted  as  the 
is  to  say,  the  substance  by  compiiris.in  wun  ■>\ii]'  n  lue  *> 
any  other  substance  may  be  meitsuri'l  l>ur  rlut  fact  l 
increase  the  weight  of  auygiven  lin.iiinry  m  w.li^t.  \i 
be  measured  by  gold,  silver,  copper,  imti,  Icid,  it  -.my  otl 
modify.  If.  for  instance,  a  given  quantity  of  li?ad  he  equal 
to  five  bushels  of  corn,  and  the  same  quantity  of  lead  be  --^ 
value  to  two  bushels  of  wheat,  it  is  plain  that  two  bushels  ot 
wheat  areas  valuable  as  five  bushels  of  corn.  The  equivalenceof 
com  and  wheat  is  thus  established  with  certainty  and  simplicity. 
The  fact  that  the  valiieof  both  cereals  was  ascertained  by  compar- 
ing them  with  lead  did  not  in  any  way  affect  the  value  of  tliat^ 
metal.  If  our  whole  commerce  were  limited  to  domestic  trade 
values  could  be  measured  by  silver  as  well  as  by  gold.  Bnti 
since  the  prices  of  our  staple  products  are  fixed  by  the  pn^M 
which  they  command  in  markets  where  values  a 


NAL  RECORD. 


and  if  the  butcher  at  that  time  happened  to  need  a  knife  an  ex- 
change of  their  wares  coiild  have  been  effected. 

If  all  commerce  were  stispended  until  each  person  who  produced 
a  commodity  should  lueet  a  person  who  needed  that  precise  com- 
modity, and  at  the  same  time  had  a  commodity  of  his  own  which 
the  first  producer  needed,  trade  would  be  reduced  to  a  very  narrow 
compass,  intercourse  between  men  would  be  greatly  restricted, 
and  this  would  be  an  age  of  poverty,  of  ignorance  and  decay,  in- 
stead of 

Mr.  HUTCHESON.  Will  the  gentleman  yield  to  a  question 
here? 

Mr.  COCKRAN,    Yes,  sir. 

Mr.  HUTCHESON.  The  gentleman's  argument  is  perfectly  un- 
answerable if  he  will  simply  allow  me  to  introdtice  an  element  for 
him.  If  a  butcher  had  the  dollar  with  which  he  paid  the  haber- 
dasher his  ai'gument  is  unanswerable;  but  if  the  butcher  had 
contracted  a  dollar's  worth  of  debt  for  the  article  he  was  to  sell 
for  that  dollar,  and  had  to  pay  it,  would  he  have  a  dollar  to  ex- 
change for  the  next  thing  he  wanted  and  at  the  same  time  satisfy 
his  debt? 

Mr.  COCKRAN.  The  gentleman,  as  I  understand  him,  asks 
me  how  one  dollar  can  discharge  and  perform  the  functions  of  two 
dollars  at  the  same  time.  The  question  answers  itself,  it  seems  to 
me.  To  do  all  that  the  gentleman  suggests  the  butcher  would 
need  to  sell  two  beefsteaks  for  two  dollars  instead  of  one  beefsteak 
for  one  dollar.     [Laughter.] 

Mr.  HUTCHESON.  He  would  have  to  get  more  dollars  to 
doit. 

Mr.  COCKRAN.  Not  at  all.  The  same  dollar  through  which 
he  had  effected  one  exchange  might  come  back  to  him  in  another 
exchange  for  another  beefsteak.  An  increase  in  the  nunaber  of 
dollars  would  do  him  no  good — an  increase  in  the  sale  of  his  beef- 
steaks would  be  of  immense  advantage  to  him.  All  trade  is  an 
exchange  of  commodities,  and  money  is  merely  the  wheel  by  which 
the  exchange  is  usually  accomplished.  Wheels  are  not  absolutely 
essential  to  motion,  biit  they  facilitate  it.  Money  does  not  make 
trade,  but  it  has  wonderfullV  increased  its  volume  by  facilitating 
exchange.  Wheels  are  of  in  calculable  value  to  transportation,  but 
to  equip  a  car  \snth  more  than  are  necessary  to  its  movement  would 
impede  the  progress  of  the  vehicle  and  would  be  a  waste  of  mate- 
rial. Money  is  a  most  important  stimulus  to  trade,  but  to  inflate 
its  volume  beyond  the  needs  of  commerce  is  a  waste  of  capital 
which  deranges  enterprise  and  paralyzes  industry.  There  is  no 
profit  in  exchanging  money  against  money;  there  is  always  a 
profit  in  exchanging  commodities  against  commodities.  If  I  ex- 
change com  for  shoes,  the  shoemaker  makes  a  profit  on  the  shoes 
which  he  sells  me,  but  the  exchange  is  equally  profitable  to  me 
because  it  enables  me  to  obtain  the  shoes  for  much  less  than  it 
would  cost  me  to  produce  them.  From  what  I  have  said  the  gen- 
tleman who  has  inteiTupted  me  wiU  understand  that  the  prosper- 
ity of  commerce  depends  not  so  much  on  the  volume  of  money 
as  on  its  soundness;  that  the  exchange  of  commodities  does  not 
depend  so  much  on  the  number  of  circulating  wheels  as  on  the 
efficiency  with  which  each  wheel  discharges  its  functions. 

Mr.  LIVINGSTON.  Will  the  gentleman  let  us  hear  him  on 
the  double  function  of  money — fixing  values  as  well  as  the  medium 
of  exchange? 

Mr.  COCKRAN.  When  the  gentleman  speaks  of  money  as  fix- 
ing values  and  as  a  medium  of  exchange  he  is  really  stating  the 
same  thing  in  different  forms.  Money  could  not  be  a  medium  of 
exchange  if  it  were  not  a  means  of  fixing  or  determining  values. 

Throughout  the  whole  history  of  the  world  men  have  fixed  the 
values  of  their  commodities  by  fixing  the  rates  at  which  they 
would  exchflTiP'ft  all  fnTirmnrlitipt;  for  snmp  nnp  pmmijndit.v.  .that  is 


CONGRESSI^' 


h 
payment  of  the  loan.    It  would  be  perfectly  proper  and  entir(Qi 
safe  for  the  bank  to  issne  a  note  of  its  own  based  on  the  propeii  i 
which  through  its  assistance  is  in  process  of  creation.    By  meat-e 
of  that  note  the  bank  could  make  a  further  loan  to  the  miller  wh 
will  grind  the  wheat  or  to  the  carrier  who  will  transport  t 
manufactured  article,  enabling  each  to  discharge  with  greaV 
efficiency  his  part  in  the  general  scheme  of  production.     Wh^el 
a  bank  enjoys  this  power  of  issue,  and  exercises  it  prndently.,n 
is  able  to  make  capital  effective  for  a  greater  development  of  trac  a 
for  a  wider  spread  of  industry.     Credit  knits  men  closely  togethie 
it  makes  each  man's  product  a  stimulus  to  the  enterprise  and  tie 
industry  of  every  other  producer,  and  the  Grovernment  should  pip 
no  restraint  upon  a  force  so  beneficent  as  this  except  the  requi ; 
ment  that  it  shall  be  exercised  within  the  limits  of  prvidence.     Li' 
every  great  force  credit  may  be  abused  and  its  abuse  leads  to  d 
astrous  results.     Supervision  by  the  Government  is  a  checks 
fraud  and  recklessness  and  it  should  be  vigilantly  exerc'sed.     Hie 
the  Government  has  no  right  to  interfere  with  this  branch  of  tr; 
further  than  to  prevent  any  bank  from  defrauding  the  public 
false  pretenses  through  its  paper  circulation.      No  conditi;  a 
should  be  imposed  upon  any  device  to  economize  money  except  1 1 
there  should  be  actual  property  behind  every  note  sent  into  ns! 
channels  of  trade  to  float  our  commerce  and  broaden  our  indust;h: 
[Applause.]  t( 

My  friend  from  Tennessee  [Mr.  Cox]  applauds  that  centime  ir. 
When  my  friend  smiles  I  feel  that  the  clouds  have  passed  fnf 
the  sun  and  that  I  am  sailing  under  favorable  skies.  n 

Mr.  COX.  I  am  very  glad  the  gentleman  is  gratified  by  ai  » 
thing  I  do. 

Mr.  COCKRAN.  I  have  never  met  my  friend  that  the  me^^ 
ing  was  not  a  source  of  pleasure.  One  of  my  deepest  regrets  e 
leaving  this  House  is  the  fact  that  my  association  with  him  m-|-, 
be  severed.  t-^ 

Mr.  HUTCHESON.  Let  me  ask  the  gentleman  thi>^  questi/ 
You  say  the  banks  should  be  permitted  to  issue  a  note  on  ^y; 
note  of  a  farmer.  Now,  why  should  the  note  of  a  bank  be  savi, 
tified  as  money  any  more  than  the  note  of  the  farmer?  |j 

Mr.  COCKRAN.  The  gentleman  puts  a  question  wliich  is  \- 
unimportant  to  this  discussion.  I  do  not  think  any  commercj^ 
paper  ' '  should  be  sanctified  as  money  "  except  so  far  as  eomme 
will  accept  it.  If  the  gentleman  will  favor  me  with  his  attent,^, 
he  will  learn  that  I  deny  the  right  of  the  Governmeno  to  inljj, 
fere  in  any  way  with  the  money  of  the  country  except  to  coin  sc,^ 
particular  metal,  some  one  product  of  human  industry  by  wlig^, 
custom  has  declared  that  all  other  commodities  should  be  mt-. 
ured.  I  have  alwaj^s  regarded  the  hand  of  the  Government'^-,, 
the  issue  of  paper  money  as  a  destructive  hand.  Bankmg,  in  g' 
its  features,  is  but  an  economy  in  the  use  of  money,  and  an  incrCj, 
in  the  amount  of  productive  capital,  I  have  stated  that  before  &-[^ 
I  repeat  it  now.  f< 

Mr.  HUTCHESON.  Will  the  gentleman  allow  me  to  elabor.j 
that  now?  ^; 

Mr.  COCKRAN.  I  am  afraid  that  if  I  do  allow  the  gentleuj 
to  elaborate  it  this  speech  will  run  into  next  week.  ,, 

Mr.  HUTCHESON.     The  only  thing  is  this 

Mr.  COCKRAN.  If  it  be  the  only  thing  I  will  let  it  go.  In 
not  expect  to  cover  this  whole  subject,  and  if  only  one  featur((] 
it  be  overlooked  I  shall  feel  well  satisfied. 

Mr.  HUTCHESON.  Under  the  same  tax  which  you  imini 
you  prevent  the  farmer  from  having  sixch  currency?  ^s 

Mr.  COCKRAN.  My  dear  sir,  I  am  opposed  to  all  tax  on  i.y 
rency  as  such. 

Mr.  HUTCHESON.    Exactly. 

Mr.  noCKRAlsr      J  o™  endeRvoriTisr, to  shn\v_t]iat  i1  is  an 


CONaKESSIONAL  RECORD. 


il  by  tlie  metal  which  is  the  intemational  standard,  i 


Mr.  CX)CKRAN.  They  are  always  paid  for  in  gold.  If  the  f ar- 
mer  were  forceil  til  measure  his  own  iiroduct  in  a  commmlity  tif 
inferior  value,  wliili?  tln'  v;ilnf=  nf  tlif  arrirl.--  he  n(-r.(lr,1  wm-  ia''ii- 

mouStroilS  rtiMi'iv       Tli'-   'Uilv  -\ -t.'Ui   i.|    L'^i-l.trimi    wljirh    lia^ 
sanctioned  robli'i  v    -■■  t.ir  ,i-  I  kn.iw.  i-  r  li-  i.inil',  ^nul  lli  it,    I   .nn 


me  tne  value  of  com- 
t  which  they  should  be  exchanged. 
Il  values  are  detf  rmined,  and  that 

rVi:iii-e.     TnirlM  in  it^  ii;ituralfMrui 


iif  the  national  banks  for  the  year 
'  sll,'Jo5,000,  or  in  round  numbevs  to 
liiid  the  banics  had  in  their  custodv 


iivi.TtiiuL'iit.  jNow,  money  la  a  t^ature,  an 
,  liL'aithy  commercial  system  it  can  not, 
uf  government;  it  must  be  the  product  of 

tiint  feature  in  facilitating  exchange,  but 


v!l;.>.-  uf  ;  h-     b^i 


uilliuu  and  odd  dollars,  Deducting 
DiJU.OtH)  which  they  earned,  we  find 
r  the  safe-keeping  of  the  funds  of  de- 


iilly  and  which  they  invest 
I  'MX.  Let  me  call  the  g> 
there.    While  the  gentlett 

f  of  profit  which  the  bankshave  realized  in'that  direction, 
7  important  item  in  the  profits  of  the  banks — 


•  ■  Lientleman  will  pardon  n 


3  these  undivided  pro 


la'nks  all  the  way  through. 

lar.  COCKRAN.  The  gentleman  e\idently 
a  laning.  In  the  figures  which  I  have  give 
il 'It-red  the  surplus  pinlits.     If   I  should   tfal 


the  value  of  the  stocks  of  the 


!■  baaed  on 


arethemselvi' 
issued  for  thi 
of  the  deposit. 


,  the  banks  of  this 
jn  the  floor  of  this 


m 


CONGRESSIONAL  RECORD. 


])a\-inent  of  the  loan.  It  would  be  perfectly  proper  and  en 
safe  for  the  bank  to  issue  a  note  of  it«  own  baaed  on  tLe  pro 
which  through  its  aBs''»tan  e  is  in  pro  ess  of  creation  Bv  ii 
of  that  note  tl  e  bank  could  make  a  f  irther  loan  to  the  niillei 
will  ^'ind  the  wheit  or  t     the  cimer  who  will  tr  d  r   i 


a  bank  enjoys  this  ] 
is  able  to  make  caj 
for  a  wider  spread   t 


monument  to  f 


upon  a  force  so  beneficent  as  th  a 


a^trons  results      Supervis  o 


there  shonld  be  actual  property  behind  < 
channels  of  trade  to  float  our  commerce  and  broaden  our 
[Applause.l 
My  friend  from  Tennessee  [Mr.  Cox]  applauds  that  d 


When  my  friend  amiles  I  feel  that  the  clouds  have  passed  fn^m 
'  "    ■  '  im  sailing  under  favorable  skies.  j 

very  glad  the  gentleman  is  gratified  by  amy- 


1  and  that  I 
Mr.  COS.     I  am 
thing  I  do. 


leaving  this  House  is  the  fact  that  my  a 


1  with  him  r 
be  severed. 

Mr.  HUTCHESON.  Let  me  ask  the  gentleman  th  qnesh 
You  say  the  banks  should  be  permitted  to  s  e  a  not«  on  ] 
note  of  "a  fanner,  Now.  why  should  the  n  e  f  a  bink  be  ' 
tified  as  m*>!icv  anv  nior.?  than  the  note  of  thu  farme 

Mr.  COCKRAN'     The  gentleman  put    a  on  w    ch 

unimportant  to  this  discussion.  I  do  not  th  nk  anv  c  mm 
paper  "should  be  sanctified  as monev" except  so  tar  as  om  u 
will  accept  it.  If  the  gentleman  will  favor  me  ^th  h  atteu 
he  will  learn  that  I  deny  the  right  of  the  C  ovemmen  to  n 
fere  in  any  way  with  the  money  of  the  count  j  tx  p  o  n  s  i 
particular  metal,  some  one  product  of  human  nd  tr  by  wL 
custom  has  declared  that  all  other  commo    ti  s  b 

ured.     I  have  always  regarded  the  hand    f  the 
the  issue  of  paper  money  as  a  destructive  1    n  1     B 
its  featnree.isbutaneconomyintheuseof  u 
in  the  amount  of  productive  capital.    I  ha  e  a  a 


modifies  orth  t^\  n 
without  aid  assiptini 
capable  of  th  s  eft 


lassed 
■  behere^ 


'he  butcher  wo  lid  not  ha  e  part  1  with  h  s  beefsteak  if  he  had 


any  doubt  as  to  the  \  al 
The  cutler  would  i  ot  1      e  j 
feared  the  m  nev  woul  1  s 
it  for  another  commod  t 
causes  men  to  keep  close  p 
money  to  idleness  and  p     1 


r  -i  1  llai  If  _, 
o  dj  xchunge 
a    e  nf  money 


.  HUTCHESON.    Will  the  gentleman  allow  i 


not  expect  to  cover  this  whole  subject,  and  if  onl>  one  featnri 
it  be  overlooked  I  shall  feel  well  satisfied 

Mr.   HUTCHESON.     Under  the  same  tax  whicl    j   t 
you  prevent  the  farmer  from  having  such     irrency 

Mr.  COCKRAN.    My  dear  sir,  I  am  opposed  to  all  t  u 
rency  as  such. 

Mr.  HUTCHESON.    Exactly. 
..Mr-  COCKRAN  .  I.«i  ondeavnrine  t^  fihow  that 


tion  of  property  and  in  the  prcie!  i 


,  has  been  said  dnriii;^ 
Gnv.Tuni.-Tit  t.^th.^  currency  that  I  hav      1     u     1    t  oh       a 
(lisr  11-.^  ;it  tlii-^l.-Ti^rth  the  elementary  econ  mcpnnc  plea  that 

Pas-iiiL:  II, iw  ti>  a  consideration  of  the  pend  ng  b  11   nobod 
deny  tliiit  it-;  principle  is  sound  so  far  as   t  pro  ndes  that  ; 
shouUi  be  based  on  the  capital  of  banks;  but  he  pro  isione  o 
8  object.^  In  my  opinimi  if  th  s  b  fshoaldpais 


House  and  Senate  and  i 


. 3  the  Pres  len 

fall  stillborn  on  our  statute  books.    There  vould'  „„>,  ^  ^^^  ^^y,^ 
curculated  under  it  in  twenty  years.    It  would  be  another  make- 
shift as  ridiculous  as  the  Sherman  Act;    t  would  remam  mopera- 
"  "  I  provu  ous    it  would  stand  a 


tive  through  the  absurdity  of  i 


s  gnature  t  would 


0  the  circulation  and  find 


Mr  Char 
the  Treas  ir 


of  a  bank  l    n         1  e  pa  -m  n   of  his     aim  not  m  the  eqm 

^ent  of  money  but  in  money  itself     A  TOible  supply  or  g<wu 


ONAL  RECOllI). 


monument  to  folly;  it  would  be  inefficient  even  as  an  engine  of 
mischief. 

]\Ir.  Chairman,  this  country  is  suffering  not  from  a  scarcity 
of  money,  but  from  a  redundancy  of  money.  When  the  Sher- 
man Act  was  mider  discussion  I  stated  to  the  House — and  the 
statement  was  then  greeted  with  derislA-e  laughter,  but  I  think  no 
gentleman  will  contradict  it  now — that  in  the  whole  history  of  com- 
merce th(^re  never  was  a  panic  caused  by  scarcity  of  money.  Every 
jianic  which  has  disturbed  the  current  of  trade,  arresting  the  free 
exchange  of  commodities,  has  been  preceded  by  an  inflation  either 
of  currency  or  of  credit.  The  amount  of  money  which  can  be 
profitably  used  in  commerce  bears  a  fixed  relation  to  the  amount 
of  commodities  to  be  circulated,  because  while  in  trade  commodi- 
ties appear  to  be  exchanged  against  money  they  are  really  exchanged 
agaihst  each  other. 

I  have  already  shown  that  one  dollar  is  able  to  exchange  com- 
modities worth  twenty  or  fifty  dollars  in  the  course  of  a  single  day 
■wnthout  aid,  assistance,  or  reenforconent;  but  the  dollar  which  was 
capable  of  this  eflficiency  was  a  dollar  whose  soundness  nobody 
questioned.  Not  one  of  the  men  through  whose  hands  it  passed 
would  have  parted  with,  his  commodity  if  he  feared  or  believed 
that  the  dollar  for  which  he  exchanged  it  would  shrink  in  value 
while  it  remained  in  his  pocket  during  the  day  or  in  his  safe  over- 
night. 

The  biitcher  would  not  have  parted  with  his  beefsteak  if  he  had 
any  doubt  as  to  the  value  of  the  coin  for  which  he  exchanged  it. 
The  cutler  would  not  have  parted  with  his  knife  for  a  dollar  if  he 
feared  the  money  woiald  shrink  in  vahie  before  he  could  exchange 
it  for  another  commodity.  A  doubt  as  to  the  value  of  money 
causes  men  to  keep  close  possession  of  their  commodities,  reduces 
money  to  idleness,  and  produces  that  redundancy  of  currency  in 
the  marts  of  commerce  which  is  always  a  feature  of  business  de- 
pression. 

Our  currency  to-day  is  redundant  beyond  the  power  of  com- 
merce to  utilize  it.  The  vaults  of  every  bank  are  now  crowded 
to  plethora  with  money  which  it  can  not  invest.  The  rates  of  in- 
terest are  so  low  that  there  is  no  profit  in  loans.  At  this  moment, 
when  a  flood  of  debauched  and  degraded  paper  money  chokes  the 
channels  of  our  circulation,  arresting  exchange,  impeding  trade, 
preventing  prosperity,  it  is  jn-oposed  that  the  banks  of  the  country 
purchase  legal-tender  notes  for  the  purpose  of  depositing  them  in 
the  Treasury  and  then  issue  three  dollars  in  bank  notes  for  every 
dollar  of  Government  notes  that  is  thus  deposited.  This  operati(m 
is  described  by  the  supporters  of  the  pending  measure  as  retiring 
the  greenbacks.  Now,  every  note  issued  against  a  deposit  is  a 
circulation  of  the  deposit  itself.  This  plan  of  issuing  notes  against 
a  deposit  of  greenbacks  would  not  retire  the  greenbacks  but  it 
would  make  them  the  permanent  basis  of  all  circulating  money. 

Here  again  we  have  an  illustration  of  that  demoralizing  influence 
which  ambiguous  phrases  have  exercised  on  economic  disciis- 
sions.  ' '  Retirement  of  the  greenbacks  "  is  an  expression  which  kin- 
dles hope  in  the-breast  of  every  believer  in  sound  finance,  because 
he  assumes  that  it  means  the  cancellation  of  the  gi-eenbacks.  But 
when  he  scans  this  bill  he  realizes  the  peculiar  capabilities  of  the 
politician  when  he  turns  economist.  He  learns  that  a  phrase  is 
often  a  substitute  for  a  principle — that  retirement  of  the  green- 
backs does  not  mean  the  cancellation  of  the  greenbacks,  but  the 
permanent  establishment  of  the  greenback  as  the  basis  of  all  oiir 
pa])er  money.  He  discovers  that  what  appeared  to  be  a  scheme  of 
citrrency  reduction  is  really  a  scheme  of  currency  expansion,  and 
as  he  finishes  the  perusal  of  the  measure  he  feels  that  if  magic  was 
the  black  art  of  the  dark  ages,  political  economy  is  a  blacker  art  in 
this  enlightened  age  of  free  speech  and  Democratic  institutions. 
ITjauirhter.l 


8  COXGKESt 


dimijiish  tliem.  I  appeal  to  the  experience  of  tlie  whole  h 
race  to  confirm  that  statement;  and  if  the  gentleman  froni 
(with  the  authority  which  he  will  exercise  as  a  Republican  ] 
over  fntnre  legislation)  will  blaze  the  pathway  in  that  dire^ 
he  will  find  me  the  humblest,  but  the  most  enthusiastic,  of  h 
lowers .     [Laughter.  1 

Mr.  HENDERSON  of  Iowa.  My  good  friend  from  New 
whose  words  I  always  listen  to  with  great  pleasure,  whet 
agree  with  him  or  not,  has  not,  I  fear,  answered  my  question 
question  is  not  about  how  we  are  to  raise  the  money.  Wha' 
him  is,  whether  the  pressing  question  upon  this  legislative 
at  this  time  is  not  the  question  of  raising  money  to  pay  the 
current  rianning  expenses  of  our  Government? 

Mr.  COCKRAN.  That  is  the  question,  Mr.  Chairman; 
is  not  all  the  question. 

Mr.  BOUTELLE.     It  is  the  first  question. 

Mr.  COCKRAN'.  Well,  that  dei>ends  on  which  vou  pu 
and  which  you  put  second.  I  think  the  order  in  wliich  the 
placed  makes  very  little  difference 

Mr.  BouTELLE  rose. 

Mr.  COCKRAN.  Now,  I  trust  that  one  gentleman  at  a 
will  catechise  me.  Let  me  answer  the  gentleman  from 
It  is  quite  true  that  the  deficit  in  the  revenue  is  an  embarrasf 
to  the  Government.  It  is  also  quite  true  that  the  deficit  in  th: 
enue  tends  to  exhaust  the  supply  of  gold,  and  therefore  ti 
doubt  on  the  Goveriunent  notes  which  circulate  as  n- 
But  surely  that  statement  is  the  strongest  possible  proof 
financial  system  is  vicious  which  makes  the  trade  an 
commerce  of  every  citizen  dependent  on  the  solvency  » 
Treasury. 

In  addressing  this  House  my  chief  object  has  been  to  pei 
it  that  every  principle  of  sound  policy  demands  the  divorce 
Treasury  from  the  function  of  furnishing  money.  Whetl 
Treasury  be  l)ankrui3t  or  prosperous,  whether  it  be  full  t' 
flowing  or  empty  of  treasure,  the  circulating  medium  by 
my  neighbor  and  I  exchaiige  our  commodities  should  alw; 
independent  of  any  condition  in  wliich  the  Treasury  migli 
itself.  The  imprudence  of  a  Secretary,  or  the  sliortsightedi 
legislation,  for  which  I  am  in  no  wayTesponsible,  which  I  c 
avoid  or  prevent,  affects  the  money  in  my  pocket,  disordt 
trade,  i^aralvzes  my  industry,  blights  mv  prospects. 

Mr.  HENDERSON  of  Iowa.  Now,  will  my  friend  allo^^ 
moment  further?  He  knows  that  I  am  in  thorough  syn' 
with  him  in  desiring  to  meet  in  some  efficient  way  the  present 
tion  of  the  country.  I  know  he  will  give  me  credit  for  tha 
has  admitted  that  no  financial  plan  pending  before  this 
will  supply  the  revenues  of  the  Government.  He  has  appe; 
the  members  of  this  House,  irrespective  of  party,  to  come 
help  of  the  coantry.  Now,  I  say  that  instead  of  wastin;. 
over  the  discussion  of  currency  measures  which,  as  is  adi 
by  the  distinguished  gentleman,  and  as  has  been  admiti 
everyone  on  both  sides  of  this  discussion  to  whom  I  ha 
dressed  the  question,  can  not  give  any  relief,  is  not  the  gent 
at  fault  in  the  line  of  remark  he  is  pursuing,  and  shoiild 
direct  the  attention  of  this  body  to  the  sole  question  of  th( 
to  raise  money  to  meet  our  obligations? 

Mr.  COCKRAN.  I  have  just  stated  that  the  actual  condi 
'the  country  strikingly  illustrates  the  folly  of  making  the  d 
condition  of  the  Treasury  any  feature  of  our  moii'.  tary  : 
whatever.  I  liave  endeavored  to  prove  that  it  is  safer  am' 
to  base  the  pa])er  money  used  in  trade  on  the  property  assets 
the  people  of  the  country  than  upon  the  debts  of  the  Govei 
in  whatever  f  ( )rm  they  may  be. 

Mr.  WALKER.  I  shou.idlike  to  have  the  gentlem  m  frc^ 
York  point  out  to  this  Eonse  thn  f(>n:'d.->-;.vr.  ''>^-  ^  '        >^.    ■ 


CONGKESSIOXAL  EECOED. 

iH.inL\  1-- thenesspuhaltoth         di                       k     N  w  m 
k  til   inc  tbmg  wblLh  this  b      d       n               d                 b     k   hall 
keel      It  t  mi  bunks  to  p       b        T                                     dp 
themiiitheTieitiin    butei       it                                        b      mny 
(liarntTthH\  w.iuMnntbe                                                           b  nk 
nst^Mintil  ittirtbefaUur.  <                                 h                         b  m 
Thlll^  1    1       1  t    1    i  l.mk. 

S 
ao    d  n 

b    H  u     b     n 


many  a  Ihu  den  wliuli  might  usb  ng         n       ] 

not  i>if\ tilt  fire  but  when  a    m  ding     burn  dd 
the  li  ss  among  all  who  contnbu  b     nsuran 

a-ibip  i-s  wretlii^d  at  sea  tbe  imd     a  m 

appDrtiuntd  among  many  sh  p  wn        all        wh  m 
an  inMirimr  or  guaranty  fund     An    n  u  ance 
cnJitini;  notes  will  place  behind   b 
funi  sufti  lent  to  m  ike  them  ab  y  ae  ur    wha  € 

enl  tun  htion  of  trade  may  be 

Mr  Lhurman  Ibebpvemtbepnrposeeipressed  by  theframera 
of  tbi^  1  ill  but  I  oppoie  itis  ena<.  tment  because  its  provisions  are  bos 
tilpt()tbppnntiplfonwbn,h  it  is  bat>ed.  I  am  aware  that  tbe  de 
Wt  f  tins  bill  will  pniUnger  all  pro'jpect  of  current  legislation 
dunu^  tbLs  L  ingress  But  it  is  better  to  bear  the  ills  we  know 
than  nsk  esptnmfuts  whose  reaulta  no  man  can  foretell  lif  we 
Lin  nut  a„THe  upon  a  plan  for  tbe  issue  of  bank  notes  let  us  it 
leist  sup]  iLss  tbe  gr-i\est  danger  which  threatens  our  mtrnnal 
ci  e  lit  ThL  bill  'suggested  by  the  gentleman  from  New  \  oi  k  [Mr 
Cor  MBsj  would  not  be  i  complete  measure  for  the  regulation  uf 
mir  faimi  <s  but  it  would  remove  a  very  serious  obstruction  to 
Mislmient  of  a  soond  monetary  system.     As  I  understand 


it  tbf  g, 

bjndb  f 

of  tbf  re  [le  md 


thes 


1  ill  tbe  irredeemable  _. 

wiU  make  them  available  for  the 
^untyfor  bank  notes.    I  am  i 
It  would  be  a  step 


uward  a  aclid  financial  basis. 

!    I  111    IS  ire  I  would  cheerfully  coniei 
'         1  y  inks  shall  be  empowered  t 


1  ed  I  can  not  understand  the  i 
1  h  has  been  manifested  on  this  H 
have  assigned  as  tbe  basib  of  tin 
ted  h\  tbe  Secretary  of  the  Ti    i 


1    -'ubacks  can  b 
iity  fund? 

Tbe  gentlem 


1  the  proportion  of  threi 


Mr  RrCHABDSON  of  Michigan     That  la  t 


• 


CONGRESSIONAL  EECOED. 


I  do  not  th  nk 
out  of    lieTr 
not  c  a  med  th 

to  the  fa  ontesof  n  tn  n     fii 

tered  br  ad  ast  from  the  bdl  onj  r 
vtII  he  s.  ed  then  except  v,he     a 


Teenbaeka  shotild  be  pa  d 


to  det  r  th  di       n 

rom 

the  Tr  ihury  ra  h     th 

ate  t     I  say  this  b  ca 

se  the  reasons  for  the  cancel 

greenback  are  6o  ohvioua  and 

0  imperatiYethat  tiflo 

Th                   k 

ti  r 

ableaa  money  because 

wl 

rm  of  ndustr  al  act  n 

not 

1   o  t  e  a  a  or  p    m 

due 

bu    n  13       the    hann 

T. 

T 

1                              I 

anotl  er  gener  tion     It 

8  an 

ness  because  t  is  forced 

out  any  refere  ce  to  1  p 

penty  of  the  n  1 
Treasurj      It 

bal  of  con    n 

to  the  counti 

would  be  e 

dign  tv  o    1 
IS  bad   ni 

u                    T               rn 

doesn  tpay  n    r    t  on 

ts  awful  d  b  a  defaidts  m  is 

gationb      T      Co       nine 

nt  hould  set  be  examp    of  t 

h     b      n  V   n 

P     luh 

g  vh    h  he 
wh   h  he  ha. 

Tie  e  ha 

ndde  goo  1    h 

M     C      KRAK     I 
t  h    1     ste 
SI      I    h  nk  th    Deu 
L  lajpa       J 

M    B    OlELLb     Th 


L 


I    n    limK  like 
wh  n  he  shall 


\  w\     kanl  1 


\N     Ithnktha 


vecanremovetheb 
slowlvpe  haps  but  su 


an  e  de  re- 
t  of  remark 


nd     tnal    ondi   uii  icuiaui  iiiu  jjc  uu    u  «    umi.  ■•  ^.uu-  — 
o  ded  how    ould  a  pan  o  be  averted 

"    '    '       -  --.--J.  portentous  which  e  ery  thought- 


• 


o 


^lONAL  EECOED. 


tained 
> 

'le  paid 
'  It  is 
'esents 
je  scat- 
mback 
lied  if 

?r  dol- 
There 
'w'hich 
ry.  I 
.uisap- 
3  from 
rith  so 
Age  on 
in  not 
,in  the 
create 
aid  by 
gi'een- 
called 
le  first 
•erates 
riggra- 
of  the 
ossary 

X  debt 
-t  does 
>f  pro- 
.rcula- 
■•e  and 
oature. 
ons  of 
1  bnsi- 
:  with- 
J  pros- 
of  the 
e  f  oot- 
sment 
credit 
n  of  its 
lation 
which 
il  obli- 
onesty 
lich  it 

■  prob- 
e  time 
rid  the 
[  have 
lences 
e  is  no 
in  not 
when 
ilation 
luallv, 
tlhaiV- 
7  tariff 
Icting 
um  of 


in  operation  at  a  loss,  bnt  the  loss  does  not  fall  upon  those  who 
conduct  them,  but  upon  the  self -sustaining,  respectable,  aggress- 
ive industries  that  ask  no  favor  from  our  Government  and  fear 
no  competition  anywhere  on  the  globe.  [Applause  on  the  Demo- 
ratic  side.] 

If  a  successful  merchant,  with  an  extensive  and  profitable  trade, 
should  establish  his  son  in  business,  and  maintain  him  in  it 
although  it  was  conducted  every  year  at  a  loss,  making  good  out 
of  the  profits  of  his  own  prosperous  trade  the  losses  incurred  in 
his  son's  unprofitable  commerce,  he  would  be  doing  precisely 
what  our  Government  forces  the  self-sustaining  indiastries  to  do 
for  the  protected  industries.  [Applause.]  If  the  natural  equiva- 
lent of  three  pairs  of  hose  be  a  bushel  of  wheat,  and  by  legisla- 
tion a  farmer  is  compelled  to  accept  two  pairs  of  hose  for  a  bushel 
of  wheat,  he  is  forced  to  contribute  fi'om  his  prosperous,  self- 
sajiporting,  unprotected  agi-iculture  the  eciuivalent  of  one  pair  of 
hose  to  the  maintenance  of  the  unprofitable  industry  of  hosiery. 
The  maker  of  hose  has  made  a  profit  on  the  money  invested  in 
his  business,  not  by  production,  but  by  taxation — not  from  any- 
thing which  he  has  cre»ited,  but  from  the  goods  of  his  neighbor 
which  he  has  been  allowed  to  confiscate.      [Applause.] 

There  has  been  a  loss  in  one  man's  business  and  it  has  been 
made  good  through  taxing  the  industry  of  another.  The  losses 
have  not  been  avoided;  they  have  been  transferred  from  those  who 
incurred  them  to  those  who  were  in  no  way  responsible  for  them. 
And  these  losses,  growing  year  after  year  in  the  rise  of  large  por- 
tions of  capital,  have  been  made  good  "by  taxation  on  articles  which 
enjoyed  no  benefit  and  could  be  granted  no  advantage  under  the 
tariff  laws.     [A])plause  on  the  Democratic  side.] 

Mr.  BOUTELLE.     Will  the  gentleman  permit  me 

Mr.  COCKR  AN.  I  shall  be  very  glad  to  yield  to  the  gentleman 
if  I  can  have  additional  time. 

Mr.  BOUTELLE.  I  only  desire  to  pay  a  tribute  to  my  friend 
from  New  York  by  saying  that  I  have  not  heard  anything  like 
that  since  the  6th  of  last  November.     [Laughter.] 

Mr.  COCKRAN.  The  gentleman  from  Maine,  when  he  shall 
liave  lived  a  little  longer,  may  find  that  an  election  does  not 
change  my  views  on  economic  questions,  nor  does  it  cause  me  to 
be  silent  when  the  truth  is  questioned.  [Applause  on  the  Demo- 
cratic side.] 

Mr.  BOUTELLE.  I  understand  that;  but  I  wanted  in  a  mild 
and  gentle  way  to  suggest  that  the  argument  the  gentleman  has 
just  advanced  here  did  not  succeed  in  con^^ncillg  the  people  of 
New  York  or  the  people  of  a  large  area  of  the  country  in  the  last 
campaign.  I  do  not  know  wliy;  perhaps  because  the  gentleman 
made  so  few  speeches  during  this  campaign. 

Mr.  COCKRAN.  I  have  well-defined  notions  as  to  the  real 
causes  of  the  disaster  which  overwhelmed  the  Democratic  party  in 
1894.  I  think  the  Democratic  party  was  not  in  the  canvass. 
[Laughter  and  applause.]     I  will  admit  that  frankly. 

Mr.  B(  J  0 1 ELLE.  The  gentleman  from  New  York  and  the  gen- 
tleman from  Maine  can  never  hold  a  debate  on  that  point. 
[Laughter.  ] 

Mr.  COCKRAN.  I  think  that  campaign  was  conducted  by  some- 
thing which  masqueraded  under  the  name  of  Democracy,  and 
which  the  people  ground  beneath  their  heels,  as  it  deserved  to  be 
gi'ound.  [Applause.]  If  the  gentleman  from  Maine  [Mr.  Bou- 
tklle]  bases  his  belief  in  the  popularity  of  protection  upon  the 
verdict  of  1894,  I  ijoint  him  to  the  verdict  of  1892  and  the  verdict 
of  1890,  and  I  say  to  him  the  American  people  are  not  inconsistent. 
They  did  not  intend  this  year  to  reverse  the  policy  which  they 
adopted  in  1892;  but  they  did  intend  to  condemn  the  heresies  which 
were  engrafted  upon  party  measures  by  the  Democratic  caucus, 
and  which  were  a  betrayal  of  Democratic  principles. 


8  CONGEESt 


diminish  them.  I  appeal  to  the  experience  of  the  whole  b. 
race  to  confirm  that  statement;  and  if  the  gentlem;in  f ron: 
(with  the  authority  which  he  will  exercise  as  a  Republican  1 
over  fntiire  legislation)  will  blaze  the  pathway  in  that  dire^ 
he  will  find  me  the  humblest,  but  the  most  enthusiastic,  of  h 
lowers.     [Laughter.! 

Mr.  HENDERSON  of  Iowa.  My  good  friend  from  New  ' 
whose  words  I  always  listen  to  with  great  pleasure,  whet 
agree  with  him  or  not,  has  not,  I  fear,  answered  my  question 
question  is  not  about  how  we  are  to  raise  the  money.  Wha 
him  is,  whether  the  pressing  qviestion  upon  this  legislative 
at  this  time  is  not  the  question  of  raising  money  to  pay  the 
current  running  expenses  of  our  Government? 

Mr.  COCKRAN.  That  is  the  question,  Mr.  Chairman; 
is  not  all  the  question. 

Mr.  BOUTELLE.     It  is  the  first  question. 

Mr.  COCKRAN.  Well,  that  dej^ends  on  which  von  pu 
and  which  you  put  second.  I  think  the  order  in  wliich  the 
placed  makes  very  little  difference 

Mr.  BouTELLE  rose. 

Mr.  COCKIi  AN.  Now,  I  trust  that  one  gentleman  at  a 
will  catechise  me.  Let  me  answer  the  gentleman  from 
It  is  quite  true  that  the  deficit  in  the  revenue  is  an  emJjarrasi 
to  the  Government.  It  is  also  quite  true  that  the  deficit  in  tli 
enue  tends  to  exhaust  the  supply  of  gold,  and  therefore  ti 
doubt  on  the  Government  notes  which  circulate  as  ii 
But  surely  that  statement  is  the  strongest  possible  proof 
financial  system  is  vicious  which  makes  the  trade  an 
commerce  of  every  citizen  dependent  on  the  solvency  ( 
Treasury. 

In  addressing  this  House  my  chief  object  has  been  to  pei 
it  that  every  principle  of  sound  policy  demands  the  divorce 
Treasury  from  the  function  of  fiTrnishing  money.  Wheth 
Treasury  be  bankrupt  or  prosperous,  whether  it  be  full  tc 
flowing  or  empty  of  treasure,  the  circulating  medium  by 
my  neighbor  and  I  exchange  our  commodities  should  alw; 
independent  of  any  condition  in  which  the  Treasury  migl^ 
itself.  The  imprudence  of  a  Secretary,  or  the  shortsightedi 
legislation,  for  which  I  am  in  no  wayTesponsible,  which  I  c 
avoid  or  prevent,  affects  the  money  in  my  pocket,  disordr 
trade,  paralvzes  my  industry,  blights  mv  prospects. 

Mr.  HENDERSON  of  Iowa.  Now,  will  my  friend  allov 
moment  further?  He  knows  that  I  am  in  thorough  syn 
with  him  in  desiring  to  meet  in  some  efficient  way  the  present 
tion  of  the  country.  I  know  he  will  give  me  credit  for  tha 
has  admitted  that  no  financial  plan  pending  before  this 
will  siipply  the  revenues  of  the  Government.  He  has  api)e; 
the  members  of  this  House,  irrespective  of  party,  to  come 
help  of  the  country.  Now,  I  say  that  instead  of  wastinr. 
over  the  disciission  of  currency  measures  which,  as  is  ad. 
by  the  distinguished  gentleman,  and  as  has  been  admit  1 
everyone  on  both  sides  of  this  discussion  to  whom  I  ha 
dressed  the  question,  can  not  give  any  relief,  is  not  the  gen; 
at  fault  in  the  line  of  remark  he  is  pursuing,  and  should 
direct  the  attention  of  this  body  to  the  sole  question  of  th( 
to  raise  money  to  meet  our  obligations? 

Mr.  COCKRAN.  I  have  just  stated  that  the  actual  condi 
4;he  country  strikingly  illustrates  the  folly  of  making  the  d 
condition  of  the  Treasury  any  feature  of  our  mou',  tary  ; 
whatever.  I  have  endeavored  to  prove  that  it  is  safm-  ani' 
to  base  the  ijaper  money  used  in  trade  on  the  property  asset;- 
the  people  of  the  country  than  upon  the  debts  of  the  Gover 
in  whatever  form  they  may  be. 

Mr.  WALKER.  I  shon.ldlike  to  have  the  gentlem,<n  frci 
York  point  out  to  this  Eou.ee  fhr^  ftin:.rl->-;.iv.  ''-"'•  -rS'-iiii'''"^'^ ''' 


CONGRESSIOlSrAL  RECORD. 


3  Af  twr  a 
lav  stem  of 
ehand  bvi 


period  of  unbpaltliy,  feverisb 
ftus  country  weakened  byexci 
n  attennated  corrency  on  tbe  otber, 


higbest  development  of  our  natural  regoni 
bers  of  this  House  to  sbow  in  onr  comme 
liberty  which  we  profess  in  political  ilisi. 


n\  affair;^  that  love  of 
sioiiy.  Lot  US  leave 
(lev'^l'ijiiiient  of  tbe 


HMR     4N     T 


KR    N       Ii    Ti 


ENDER  ON 
TKRAN 


be  same  aoxiety  that  the 

to  d    what  13  best  for  the  country 

d      underst  nd  my  friend  to  say 

n  i  Dt,  1  efore  the  House? 

lid  understand 

e  plan. 

t  favor  any  plan 

r  re  plan  would  be 

mu  b  from  tbis  House. 

Ai  m  favor  of  it  if  it  could 


h     ill  before  tbe  House, 
d  b 
Th       ifi  no  such  proposition  as 

nb  d  to  tbe  gentleman  tbe  plan 
p        be  Baltimoreplan  myself, 
t  whatever  of  its  passage. 


to  be  maintained  by  each 

my  friend  to  say  that  be 

upport  it,  and  support 
fltt        '  ■  ■' 


6  gentleman  believe  that 
r  the  Walker  plan,  either 
gold  from  the  Treasury; 

be  gentleman  asked  that 


■nring  to  show  that  the 
]>iii<\.  I  agree  ivitb  tbe 
II-  .I'-bts  we  would  have 
.  vHHues  and  our  credit 
I  place  all  our  debts  on  a 


be  tbbX  question  wbicb  we^ 
address  our  nilnda  to  the 
ebta? 
gentleman  baa  revived  at 


ask  his  H  us        gr 
h     m  ustnal  fi    d  th 


taxation,  but  to  still  further 


CONGKESSIOlsrAL  RECOED. 


!uu  ul  ijismy  mL.m-y       i       tb    Jaily 
onr  Govemment? 
i  the  question,  Mr.  Chainnan;  but  it 


Mr.  BOUTELLE. 


I  am  d  ^c  I  s  ng  a  I  Ian  for  the  reUef  of  the  people  at  .K' 

\ic  oua  monetary  system.  »'™l"eoitii„ 

I  ER     Must  not  that  be  accomplished  through  the 

I   R  VN      Not  neceasarily.    There  ti  no  mora 

i   h     Itiea  of  the  Treasurv  shoul.l  pmlrLrrT==     ^^^^ 

th     tl     \  &i    Uties    fd       nmercial!!oiisi-lik.-H  R  i'l,fii„  i""*"! 

mlaTass  me      Tl    re  3  no  mort^  r.^.-.un  wl,v  tl/"  ,, 'i  V'"^''?''!'! 

Treas  r    eh    Ud  di  t   rl  1  y  ramm.To^  tl^,r,  il.ai  tl,,.  ,3"!fi     ™ 

Drexel   More  n  Jt  C      s!  o  ill  interf.T.- \wtl,  it  I'^^'^ionaof 

Mr  "^  \LKER     Is  t  a  t  a  fact  tliat  th,-  aisturhance  of 
financial  condition  of  the    n  intry  shows  itsplf  fir^t  rif  rIi  ji  J?'"' 
condition  of  the  Treasury,  and  that  anything'  which  will  fbI- 
the  Treasury  will  relieve  the  country?  ^"^''■® 

Mr.  COCKRAN.     In  one  sense  the  gentleman's  statemenl  ia «™ 
rect.  but  it  only  shows  that  our  monetary  system  in  y 


h   d  bts        h    li 


1  ttvicioM 


h   Tr  ■■ 


g         ma     fr  ra      w     r         H 
fr  mMassacb  [Mi     V 


ha      If     laCo  gress  : 


r~ 


rilOXAL  llECOED. 


.iiman 

^'lowa 

eador 

.■tion, 

^isfol- 

^Zork, 
'lier  I 
''\  Mv 
^lask 
V  body 
^  daily 

'Ibut  it 


■jt  first 
.V  are 

,i 

,  time 
^■.owa. 
''  ment 
,;3rev- 

.(•  «^^* 
,  )ney. 

■  hat  a 

'l  tlie 

f  the 

i3uade 
yof  the 
fir  the 
\  over- 
ly.vhich 
( ^ys  he 
iZ  find 
;i3ss  of 
>  an  not 
'cvs  my 

s'  me  a 
(pathy 
!r.ondi- 
1.  He 
viouse 
liled  to 
ito  the 
1  time 
lifted 
•d  by 
(,'6  ad- 
lueman 
[  18  not 
.1  hour 
e 

:)  ion  of 
-bts  or 
« 3'stem 
I.  wiser 
(  of  all 
r  iment 

'.••New 


am  not.  I  am  discussing  a  plan  for  the  relief  of  the  people  of  this 
country  from  a  vicious  monetary  system. 

Mr.  WALKER.  Must  not  tliat  be  accomplished  through  the 
Treasury? 

Mr.  COCKRAN.  Not  necessarily.  There  is  no  more  reason 
why  the  difficulties  of  the  Treasury  should  embarrass  me  than 
that  the  difficulties  of  a  commercial  house  like  H.  B.  Claflin  should 
embarrass  me.  There  is  no  more  reason  why  the  condition  of  the 
Treasury  should  disturb  my  commerce  than  that  the  operations  of 
Drexel,  Morgan  &  Co.  should  interfere  with  it. 

Mr.  WALKER.  Is  it  not  a  fact  that  the  disturbance  of  the 
financial  condition  of  the  country  shows  itself  first  of  all  in  the 
condition  of  the  Treasury,  and  that  anything  which  will  relieve 
the  Treasury  will  relieve  the  country? 

Mr.  COCKRAN.  In  one  sense  the  gentleman's  statement  is  cor- 
rect, but  it  only  shows  that  our  monetary  system  is  on  a  vicious 
basis. 

Mr.  WALKER.    That  embarrasses  the  Treasury,  does  it  not? 

Mr.  COCKRAN.  Assuredly  it  does — or  rather  I  should  say  the 
Treasury  embarrasses  the  monetary  system. 

Mr.  WALKER.     Then  correct  that. 

Mr.  COCKRAN.  That  is  what  I  am  trying  to  do.  I  do  not  say 
the  Baltimore  plan  would  afford  any  relief  whatever  to  the  Treas- 
ury; it  is  not  pretended  that  it  would 

Mr.  HENDRiX.     It  was  never  intended  to. 

Mr.  COCKRAN.  And  I  believe  it  was  never  intended  to  re- 
lieve it.  Its  object  is  to  emancipate  the  money  of  the  country  from 
the  control  of  the  Treasury  and  to  leave  the  supply  of  currency  to 
the  natural  operations  of  commerce.  To  support  that  principle  I 
have  taken  the  floor. 

Mr.  WALKER.  Just  one  word  further.  Is  it  not  a  fact  that  it 
is  impossible  to  do  what  you  say  ought  to  be  done  and  must  be 
done  until  we  direct  our  attention  to  the  Treasury  in  its  connec- 
tion -with  the  greenback  issues? 

Mr.  COCKRAN.  1  do  not  believe  there  is  any  substantial  dis- 
agreement between  the  gentleman  and  me.  He  says  we  must  turn 
our  attention  to  the  Treasury.  I  say  we  must  turn  our  backs 
to  the  Treasury.  There  seems  to  be  a  difference  between  us,  but  I 
think  we  mean  the  same  thing.  I  regard  the  Treasury  as  a  dis- 
turbing influence  in  our  currency,  and  I  am  sure  he  I'egards  it  in 
the  same  light,  although  we  use  different  words  to  convey  the  same 
meaning.  A  contribution  of  !$1  from  each  inhabitant  of  the 
United  States  would  cure  the  deficit;  the  losses  of  the  people  from 
the  corruption  of  the  currency  through  the  circulation  of  Gov- 
ernment notes  may  be  computed  by  billions  of  dollars.  The  ques- 
tions of  the  gentleman  from  Iowa  [Mr.  Henderson]  and  the 
gentleman  from  Massachusetts  [Mr.  Walker]  are  themselves  un- 
answerable arguments  that  if  the  country  is  to  gain  a  permanent 
l)rosperity  it  must  liberate  its  monetary  affairs  from  the  control 
of  the  Trea.surv. 

Mr.  WALKER.     So  say  we  aU. 

Mr.  COCKRAN.  I  am  glad  to  hear  that.  If  this  Congress  pro- 
vide for  the  extinction  of  the  greenback  the  currency  cpiestion 
will  settle  itself.  If  we  leave  the  circulation  of  commodities  to 
the  medium  of  exchange  which  trade  finds  most  effective,  tne 
Treasury  will  be  at  once  reduced  to  its  natural  functions  of  col- 
lecting from  the  commerce  of  the  country  that  proportion  of 
money  that  is  necessary  to  the  support  of  the  Government.  When 
the  authority  of  Government  shall  have  been  limited  to  the  lines 
prescribed  by  Democratic  institutions  and  Democratic  principles, 
when  the  currency  shall  have  been  emancipated  from  the  control 
of  ignorance  and  the  interference  of  folly,  when  it  shall  have  been 
firmly  established  upon  the  industry  and  the  capital  of  our  citi- 
zens, it  will  be  no  longer  a  source  of  danger  and  disturbance  to 


THE    CURRE      CY. 


SPEECH 


OF 


Hon.  JEREMIAH  V.  COCKRELL, 

OF   TEXAS, 


HOUSE  OF  REPRESENTATIVES, 


Thursday,  February  14,  1895. 


TV^SHIISTG-TON'. 

1895. 


SPEECH 

OF 

HON.    JEREMIAH   V.   COCKRELL. 


On  the  joint  resolution  (H.  Res.  275)  authorizing  the  issue  of  $62,116,275  of  gold 
3  per  cent  bonds. 

Mr.  COCKRELL  said: 

Mr.  Speaker:  I  believe  this, is  the  last  time  the  Fifty-third  Con- 
gress will  be  called  upon  to  determine  an  uncalled-for  issue  which 
was  precipitated  upon  the  country  over  two  years  ago  by  those 
holding  United  States  bonds,  together  with  all  other  classes  of 
securities  running  for  a  long  time,  payable  in  the  current  coin 
of  the  United  States. 

This  issue  was  not  before  the  people  when  they  determined  who 
should  fill  the  executive  chair  of  this  great  Republic. 

The  Democratic  party  won  the  victory  in  the  last  Presidential 
campaign  on  the  tariff  issue.  It  was  true  that  the  standard 
bearer  of  the  party  did  not  claim  to  favor  free  coinage;  in  fact  it 
was  known  that  he  opposed  this  measure,  but  he  declared  himself 
a  bimetallist  and  was  elected  upon  a  platform  which  by  every 
fair  and  lanstrained  construction  meant  the  use  of  both  gold  and 
silver  as  the  money  of  final  redemption.  No  one  dreamed  of  any- 
thing else,  except  those  who  were  conspiring  to  change  the  whole 
administration  of  financial  affairs. 

Now,  it  is  too  thoroughly  and  certainly  known  from  past  events, 
which  can  not  be  successfully  denied,  that  speculators,  bond  hold- 
ers, and  bankers  precipitated  this  un-called  for  crisis  upon  this 
country  which  has  cost  the  people  of  this  nation  billions  of  dol- 
lars, has  paralyzed  every  industry,  filled  the  country  with  paupers, 
and  brought  upon  the  people  of  our  country  more  want  and  suffer- 
ing than  was  produced  bj'  the  late  war  outside  the  mental  anguish 
and  suffering  caused  by  the  loss  of  life. 

This  was  accomplished  by  a  concerted  scheme  to  repeal  an  ob- 
noxious law  which  discriminated  against  one  of  the  metals,  a 
metal  which  has  been  used  as  money  in  all  business  transactions 
of  this  country  for  a  hundred  j^ears,  and  in  which  every  obliga- 
tion of  the  Government  might  be  paid;  had  been  inserted  on  the 
face  of  all  the  Government  obligations,  and  by  implication  on  the 
face  of  all  time  contracts.  The  sole  object  of  this  issue  being 
forced  upon  Congi-ess  was  to  try  to  destroy  one-half  of  the  money 
of  ultimate  redemption  and  thereby  increase  the  purchasing 
power  of  the  remaining  one-half  by  forcing  the  country  to  a  gold 
standard. 

This  was  most  vehemently  denied  and  those  advocating  the  un- 
conditional repeal  of  the  purchasing  clause  of  the  Sherman  law 
declared  in  the  most  tragic  manner  that  they  were  bimetallists, 
and  promised  the  country  immediate  relief  from  the  terrible  strain 
1853  3 


upon  every  industry.  The  law  was  repealed,  but  tlioir  predictions 
have  not  been  f  ufilled:  the  clouds  of  distress  still  obscure  the  finan- 
cial vision.  Grold  left  the  Treasury  in  increased  amounts.  In 
fact,  more  gold  left  the  Treasury  in  1^94  than  for  eight  or  ten  years 
all  told  prior  to  that  time. 

The  next  move  on  the  financial  chessboard  by  the  players  of 
this  mystic  game  of  finance  was  to  prove  to  Congress  that  it  was 
impos.sible  to  retain  $100,000,000  of  gold  under  existing  conditions, 
as  a  redemption  fund,  to  redeem  the  outstanding  greenbacks. 
This  $100,000,000  of  gold  reserve  and  these  outstanding  green- 
backs had  been  in  existence  for  twenty  years,  and  yet  no  complaint 
was  ever  heard  iintil  after  the  purchasing  clause  of  the  Sherman 
Act  was  repealed. 

It  was  well  knowTi  to  those  who  were  manipulating  the  moves  on 
the  financial  chessboard  that  as  long  as  the  power  remained  to  pur- 
chase silver  bullion  and  coin  even  a  limited  amount  of  silver  dollars, 
being  a  i)art  of  the  money  of  the  Constitution  and  of  final  redemp- 
tion, a  raid  on  the  gold  reserve  would  not  accomplish  their  pur- 
pose. After  the  purchasing  clause  was  repealed  the  hoarding  of 
greenbacks  and  Treasury  notes  began,  and  as  their  object  lesson 
had  succeeded  so  well  in  accomplishing  the  repeal  they  began 
their  raids  on  the  gold  reserve,  and  when  the  gold  in  the  Treasury 
reached  the  seventy-million-dollar  dot  they  began  to  cry  "  want  of 
confidence." 

The  honor  and  credit  of  the  nation  was  at  stake  and  the  gold 
reserve  must  be  restored.  With  the  greenbacks  and  Treasury 
notes  they  raided  the  gold  reserve  and  locked  it  up  in  the  vaults 
of  banks,  and  these  bankers  were  then  ready  to  restore  confidence 
and  to  maintain  the  honor  and  credit  of  the  Government  bj'  ex- 
changing this  gold  for  bonds.  The  bonds  were  issued,  the  gold 
reserve  was  restored,  and  the  confidence  of  the  manipulators  was 
restored. 

The  next  move  was  to  shake  their  own  confidence,  for  no  one 
else  had  lost  confidence  either  in  the  honor  of  the  Government  or 
the  ability  to  meet  all  its  obligations  in  the  money  of  the  contract 
and  that  to  the  perfect  satisfaction  of  the  people,  but  in  order  to 
quiet  their  own  fears  another  raid  on  the  Treasury  began;  they 
took  their  hoarded  notes  to  the  Treasury  a  second  time,  drew  out 
the  same  gold  they  had  deposited,  and  again  reduced  the  gold  re- 
serve in  the  Treasury  below  what  they  termed  the  danger  point, 
and  again  they  cried  want  of  confidence  and  tried  to  get  the  peo- 
ple all  over  the  country  to  take  up  the  cry,  and  in  trying  to  spread 
the  contagion  so  alarmed  the  Administration  that  another  bond 
issue  was  proposed  in  order  to  satisfy  these  cormorants  in  in- 
creasing their  wealth  by  dealing  in  bonds  at  the  expense  of  the 
taxpaj'ers  of  the  nation. 

This  was  done,  and  as  soon  as  the  bonds  were  safely  stored  they 
began  for  a  third  time  to  raid  the  Treasury:  and  they  had  evi- 
dently added  workers  in  their  scheme,  for  there  was  a  regular 
scramble  among  the  patriots,  whose  confidence  had  been  restored, 
to  see  who  could  draw  the  greatest  amount  of  gold  from  the  Treas- 
ury: and  again  it  was  in  order  to  put  on  the  sable  gai-ment  of  want 
of  confidence  and  parade  the  streets  as  mourners  over  the  down- 
fall of  a  nation's  honor  and  credit.  And  yet,  strange  as  it  may 
Beem ,  this  nightmare  of  ruin  has  frightened  and  deluded  many  good 
and  ])atriotic  men  into  the  belief  that  the  Government  is  on  the 
verge  of  financial  ruin. 
I85;i 


The  next  move  of  these  financiers,  all  clothed  in  mourning, 
was  to  declare  that  there  was  no  relief  from  the  disastrous  con- 
sequences which  surrounded  the  Treasury  except  to  take  up  this 
hated  and  despised  Treasury  and  greenback  notes,  with  which 
they  had  raided  the  gold  reserve  for  the  third  time,  bj'  issuing 
$500,000,000  in  gold  bonds  bearing  3  per  cent  interest.  This  unrea- 
sonable and  arrogant  demand  was  acceded  to  by  the  President, 
who  sent  a  message  to  Congress  asking  that  power  be  granted  to 
the  Treasurer  to  issue  these  bonds. 

It  is  a  fact  shown  by  the  sale  of  the  bonds  that  on  the  very  day 
Congress  was  called  upon  to  enact  into  law  this  uncalled-for  meas- 
ure, United  States  bonds,  payable  in  coin,  running  for  less  than 
twelve  years,  were  selling  in  the  markets  for  3  per  cent,  and  yet 
Congress  was  called  upon  to  issue  gold  bonds  bearing  3  per  cent. 

Congress  promptly  refused  to  carry  out  this  scheme  of  the  con- 
spirators to  compel  the  Government  to  submit  to  their  demands — 
the  measiTre  was  defeated  by  a  decided  majority,  a  majority  of 
Democrats  voting  against  the  measure. 

Let  it  be  understood  up  to  this  point  it  was  declared  the  credit 
of  the  country  woiild  be  ruined  and  the  gold  was  still  being  with- 
drawn from  the  Treasury,  but  upon  the  demand  being  made  on 
Congress  for  this  bond  issue,  and  after  the  defeat  of  the  measure, 
gold  suddenly  ceased  to  leave  the  Treasury,  having  reached  the 
low-water  mark  of  $42,240,000,  and  it  has  since  that  time  slightly 
increased.  The  danger  point  was  reached  by  the  bankers  them- 
selves; they  covild  not  afford  to  go  farther  in  their  efforts  in  dis- 
criminating against  their  own  securities,  made  pa.yable  in  coin,  as 
it  might  discredit  them  abroad,  and  they  began  at  once  to  hedge 
against  the  disastrous  resvilts  that  might  follow. 

Now,  to  show  the  opinion  of  some  of  the  bankers  in  regard  to  a 
Treasury  depleated  of  gold,  and  what  it  means.  I  will  quote  frona 
Mr.  Henry  Clews,  of  the  firm  of  Henry  Clews  &  Co.,  a  large  bank- 
ing house  in  New  York,  men  who  have  and  continue  to  demand 
gold  bonds.  The  effect  of  the  failure  of  the  Government,  to  pay 
gold  on  demand  is  clearly  and  truly  portrayed  by  this  banker  in 
his  circular  of  February  2,  1895 

Hear  what  he  says: 

The  worst  of  the  squall,  I  think,  is  now  over.  Some  people  have  been  more 
frightened  than  hurt.  If  the  United  States  Treasury  should  by  chance  sus- 
pend gold  payments,  which  is  the  worst  that  can  happen,  and  that  is  not 
likely,  even  in  that  event  the  holders  or  legal  tenders  would  most  likely  want 
to  get  out  of  their  money  and  take  stocks  and  bonds  instead,  as  at  the  present 
prices  most  of  the  active  marketable  securities  are  about  down  to  a  solid 
gold  basis,  while  the  money  they  hold  will  lose  its  gold  value,  for  a  time  at 
least,  if  the  Treasury  should  discontinue  gold  payments. 

The  business  interests  of  the  country  have  gone  down  to  a  ^old  basis.  It 
is  so  with  manufactured  goods  of  every  description.  It  is  so  with  iron,  steel, 
cotton,  grain,  and  securities  also.  The  threat  now  is  that  the  circulating 
money  of  the  country  is  going  to  drop  from  a  gold  basis  to  a  silver  Viasis, 
which  would  be  so  if  gold  redemption  of  its  notes  were  stopped  by  the  Treas- 
ury, in  which  event  the  next  turn  would  be  for  sagacious  people  to  exchange 
thwr  nonredeemable  paper  money  into  manufactured  goods  or  raw  material, 
such  as  iron,  grain,  and  cotton:  also  into  securities  or  anything  els  >  that  has 
dropped  down  to  a  low  basis  of  value.  The  feeling  would  set  in  to  Ijuy  (-very- 
thing  that  looks  like  a  bargain,  which  would  be  the  forerunner  of  buoyant 
and  advancing  markets  in  all  lines  of  business  in  this  country. 

Mr.  Speaker,  it  seems  to  me  that  the  very  decided  vote  against 
the  $500,000,000  bond  bill,  including  a  majority  of  both  Demo- 
cratic and  Republican  Congi-essmen.  should  have  satisfied  ^Mr. 
Carlisle  that  the  Fifty-third  Congress  would  never  consent  to  de- 

1853 


6 

grade  its  o^^m  outstanding  indebtedness  by  making  gold  the  only 
money  of  ultimate  redemption  in  the  interest  of  the  creditor 
classes. 

In  view  of  the  desperate  effort  to  discredit  the  outstanding  obli- 
gations of  the  Government,  for  that  would  be  the  result  of  the 
proposed  legislation,  during  this  uncalled  for  and,  in  my  opinion, 
unwise  demand  made  for  a  gold  standard,  the  outstanding  Gov- 
ernment bonds  made  ])ayable  in  coin  have  maintained  a  steady  and 
uniform  price,  equal  to  that  of  any  period  of  the  i)ast,  in  all  of  the 
markets  of  the  world,  and  to-day,  outside  of  attempted  legalized 
legerdemain  and  official  diplomacy,  have  stood  the  fearful  strain 
attempted  to  be  placed  on  them  to  discredit  them  in  the  hands  of 
holders.  Yet  they  maintain  their  accustomed  value  except  by  those 
who  are  proposing  to  soil  them  to  a  foreign  syndicate  below  the 
market  price,  by  private  bargain  with  men  whose  very  presence 
in  the  transaction  cast  a  shadow  ui)on  the  sale,  at  a  loss  of  from 
nine  to  sixteen  million  dollars,  principal  and  interest,  to  the  people 
of  the  United  States. 

Mr.  Speaker,  some  of  us  who  have  watched  with  interest  each 
succeeding  event  that  has  transi)ired,  and  each  move  made  by  the 
players  for  a  gold  standard  (oiK;e  so  vehemently  denied  on  this 
floor)  on  the  financial  chessboard,  are  not  at  all  surprised  at  this 
the  expiring  hope,  once  buoyant  in  the  minds  of  financial  plotters, 
that  they  might  increase  the  vahie  of  their  hoarded  gold  and  give 
it  a  double  purchasing  power  over  the  jjroducts  of  all  labor.  I 
trust  that  the  action  of  this  House  will  crush  this  hope  and  that 
this  will  be  the  final  funeral,  and  that  those  opposing  the  measure 
will  bury  it  so  deep  that  it  can  never  rise  again. 

The  mysterious  garment,  confidence,  has  played  a  conspiciious 
part  in  each  move,  yet  the  credit  of  the  Government  has  remained 
unimpaired  during  all  of  the  mad,  hideous  cries  which  were  cal- 
culated to  destroy  the  confidence  of  our  creditors  in  our  ability  to 
pay  the  small  debt  we  owe  in  any  money  that  would  be  acceptable 
to  them.  The  ^vl■itten  history  of  iiast  events  is  an  open  book  out 
of  which  we  can  gather  information  which  will  prove  to  us  the 
power  of  this  Government  to  meet  all  demands  made  upon  it; 
hence  none  who  are  acquainted  with  the  financial  history  of  our 
country  have  lost  confidence  in  its  ability  to  meet  all  its  obligations 
and  in  a  manner  perlectly  satisfactory  to  its  creditors;  none  doubt 
this  but  the  gold  shylocks.  Let  us  see  what  some  of  the  history 
of  the  past  shows.  At  the  close  of  the  late  war  the  Government 
had  outstanding  demands  against  it  for  the  enormous  sum  given 
below.  The  figures  also  show  the  amount  of  expenditures  for  all 
purposes  up  to  date. 

Interest-bearing  debt  in  1805 $3, 396, 561, 186 

Bonds  afterwards  issued  for  redemption 195,500,000 

Total 2,592,061,186 

Bonds  and  interest-bearing  debt  outstanding  now,  not  including 

iiig  tliiise  issued  in  ai<i  of  Pacific  railroads 679.188,1-SO 

Paid  and  i-ctir<-d  since  ISIm l,91:.'.,S'.t:(,056 

Premium  p.'iid  on  loans  and  redemptions 119.S4U.H86 

Paid  in  iiensions 1,7~1..'>:U,  (i6,'J 

Administration  expenses.  Pension  Department  estimate tiO.O(H),(K)0 

Interest  on  public  debt 2,4<i.s.:fs:j,  7;u 

Greenbacks  retired,  about 97,  UK),  569 

Amount  paid  on  account  of  war  debt 6, 379,  .570, 905 

1853 


other  expenses  paid  in  same  period: 

War  Department,  for  support  of  Army,  improvement  of 
rivers  and  harbors,  payment  of  war  claims,  and  f ortifica- 

■      tions $3,672,481,740 

New  department  for  support  of  Navy  and  building  new 

Navy  .- 746,917,248 

To  the  Indians 204,343,050 

Expenses  of  civil  administration 2,039,033,509 

Total  expenses  of  the  Government 5,653,674,277 

Add  war  expenses  as  above 6,379,570,905 

Grand  total 12,033,345,382 

This  estimate  was  made  by  Mr.  Coombs,  of  New  York,  a  solid 
gold-standard  man,  and  I  suppose  it  is  approximately  correct.  It 
will  be  remembered  that  over  $6,000,000,000  of  this  debt  was  the 
result  of  the  late  war,  when  our  population  was  less  than  40,- 
000,000,  and  half,  or  nearly  so,  of  our  people  were  almost  paupers. 
Since  that  time  our  population  has  almost  doubled,  and  the  wealth 
of  the  country  about  three  times  what  it  was  then,  and  yet  un- 
der such  a  load  of  accumulated  debts  the  country  has  prospered 
and  met  this  vast  debt  with  money  under  previous  conditions  and 
in  a  way  satisfactory  to  the  creditors  of  the  Government.  We 
are  told  now,  with  a  debt  of  a  little  over  a  billion  of  dollars,  in 
bonds.  Treasury  notes,  and  greenbacks,  all  told,  that  we  are  on 
the  verge  of  a  financial  crisis  such  as  the  world  has  never  experi- 
enced. 

What  a  miserable  subterfuge  with  which  to  alarm  the  country 
and  frighten  Congress  into  adopting  the  gold  standard,  for  fear  the 
Grovernment  will  lose  $16,000,000  if  Congress  does  not  accede  to 
the  demands  made  by  reason  of  a  secret  sale  or  contract  entered 
into  by  those  in  authority  to  sell  the  credit  of  the  country  to  for- 
eign syndicates  composed  in  part  of  Jewish  bankers. 

The  representatives  of  the  people  now  have  it  in  their  power  by 
a  vote  to  defeat  this  last  attempt  of  the  shylocks  to  put  the  country 
at  their  mercy  by  such  a  decided  majority  as  will  put  the  question 
at  rest,  for  the  present  at  least,  and  it  is  to  be  hoped  for  all  time. 
As  a  Government  we  have  placed  ourselves  in  a  most  humiliating 
attitude,  a  position  that  should  bring  the  blush  of  shame  to  the 
cheeks  of  every  true  and  honest  patriot. 

When  patriotism  was  the  keynote  that  made  our  securities  at 
home  and  abroad  more  desired  than  those  of  all  other  nations, 
with  a  ponderous  debt  of  many  billions  of  dollars  resting  upon  the 
honor  and  credit  of  a  patriotic  people,  there  was  no  wrangling 
about  the  character  of  our  money,  but  the  moment  patriotism  was 
put  aside  and  avarice  assumed  its  place  in  the  legislation  of  the 
country,  that  moment  the  greed  and  the  spoils  of  trickery  and 
trafl&c  in  the  legislation  of  this  great  Republic  began,  in  the  inter- 
est of  a  few  who  were  holding  our  securities,  national  and  cor- 
porate, at  home  and  abroad;  they  sought  at  once  to  increase  their 
wealth  by  destroying  half  of  the  money  of  the  nation  under  cover 
of  protecting  the  credit  of  the  Government,  to  give  confidence. 

The  people  are  now  beginning  to  understand  this  issue.  The  long 
concealed  purpose  has  been  fouglit  under  the  false  declaration  of 
bimetallism.  They  have  deceived  many  good  men  by  claims  of 
bimetallism;  manj'  did  not  fully  understand  the  situation  until 
the  demand  for  the  five-hundred-million-dollar  gold  bond  issue, 
and  this  most  extraordinary  measure  reported  by  the  Ways  and 
Means  Committee.    It  is  to  be  hoped  that  this  House,  Republicans 

1853 


8 

and  Democrats,  will  give  this  measure  such  an  overwhelming  de- 
feat that  it  will  not  take  up  the  time  of  this  Congress  any  more. 

The  credit  of  this  Government  will  not  be  impaired  in  the  least 
if  we  go  to  a  silver  basis;  it  is  not  witMn  the  power  of  the  men 
who  are  pressing  a  gold  standard  to  injure  the  credit  of  this  greart 
nation,  and  their  frantic  efforts  to  deceive  the  people  will  fall 
powerless  at  their  feet.  The  sovereign  people  of  this  great  nation 
will  see  that  its  credit  is  not  imiiaired  either  by  this  or  any  future 
Administration.  And  they  will  also  see  that  the  money  of  the 
people,  the  money  of  final  redemption,  is  not  destroyed  at  the 
mandate  of  any  set  of  bankers  at  home  or  abroad. 

There  is  not  a  man  on  this  side  of  the  House  who  would  vote  for 
any  act  that  would  cast  the  least  degree  of  susiiicion  iipon  the 
power  and  ability  of  this  Govei'ument  to  furnish  gold  when  gold 
is  needed  to  carry  on  legitimate  commerce  with  countries  that  use 
gold  exclusively;  but  more  than  half  of  the  Democratic  members 
are  opposed  to  the  policy  or  measure  authorizing  the  Secretary  of 
the  Treasury  to  furnish  gold  for  speculative  purposes.  We  are 
opposed  to  that  policy  which  has  brought  discredit  and  humili- 
ation iipon  oiar  management  of  the  finances  of  this  country  by 
putting  us  as  suppliants  at  the  feet  of  a  few  foreign  bankers,  when 
it  is  Avithin  the  power  of  the  Secretary  of  the  Treasury,  under  the 
law,  to  pay  all  demands  upon  the  Treasury  in  either  gold  or  silver 
coin. 

It  would,  however,  not  be  necessary  to  pay  out  one  dollar  in 
silver  not  wanted  or  desired  by  the  creditor  if  those  speculators 
were  notified  that  no  gold  should  go  out  of  the  Treasury  to  be 
used  to  discredit  the  nation's  ability  to  deal  honestly  with  its 
creditors.  Pay  gold  where  gold  is  needed  to  settle  the  balance  of 
trade  against  us  and  for  all  legitimate  pl^rposes  of  trade  and  com- 
merce. It;is  to  be  hoped  that  at  at  no  distant  day  some  man  will 
hold  the  important  position  of  Secretary  of  the  Treasury  who  will 
have  the  courage  at  least,  to  put  it  mildly,  to  carry  out  the  plain 
letter  of  the  law.  Then  this  business  of  buncoing  the  Treasury 
will  cease.  Then  will  we  cease  to  be  the  laughing  stock  of  other 
nations,  and  not  until  that  period  arrives  will  prosperity  return. 
1853 

O 


THE   CURRENCY. 


Volume  controls  price,  and  prices  control  profits,  prosperity,  and  the 

equity  of  all  time  payments.     Who,  then,  should 

control  volume? 


The  invisible  empire  of  ■wealtli  is  not  bounded  by  ocean  shore  or  mountain 
range.  Its  conquests  are  the  wealth  of  all  trading  nations ;  its  victims,  the 
helpless  people  of  all  climes;  its  demands,  the  patient  toil  and  slavery  of  all 
races;  its  instrument,  gold  redemption  bank  money. 

The  most  elemental  and  firmly  established  truth  in  monetary  science  is  that 
volume  controls  price. 

"Let  principles  be  once  firmly  established  and  particulars  will  adjust  them- 

selves. "— Jlf arc/a  refte  Fuller. 


SPEECHES 


HON.  HENRY  A.  COFFEEN, 


OK    WYOPvlING, 


HOUSE  OF  REPRESENTATIVES, 


Tuesday,  January  8,  and  Friday,  January  35,  1895. 


^A^ASHINGTON. 

1895- 


SPEECH 

OF 

HON.    HENRY    A.    COEFEEN, 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8149)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes- 
Mr.  COFFEEN  of  Wyoming  said: 

Mr.  Chairman:  The  great  financial  controversy  between  tlie 
money  power  and  the  people  hinges  upon  the  simple  question: 
Who  shall  control  the  issuance  and  the  volume  of  money  in  cir- 
culation? 

The  advocates  of  bank  issues,  coming  forward  with  the  claim 
tliat  the  currency  must  be  "reformed,"  ask  Congress  to  deprive 
the  Government  of  the  right  to  issue  paper  currency  for  general 
circulation  ana  empower  the  banks  to  both  issue  currency  and 
expand  or  contract  the  volume  in  circulation  at  their  own  option 
and  as  their  interests  might  suggest.  On  the  other  hand,  repre- 
seiiting,  as  we  believe,  the  interests  of  the  people,  we  demand  the 
suijpression  of  all  bank  issues  and  the  future  issuance  of  all  forms 
of  money,  whether  coin  or  paper,  by  the  Federal  Government, 
making  all  issues  full  legal  tender,  and  controlling  and  regulating 
the  volume  in  strict  accord  with  the  interests  of  industry  and  the 
maintenance  of  equity. 

WHAT  IS  THE  USE  OR  FUNCTION  OF  MONEY? 

The  functions  of  money  are  three  in  number — to  furnish,  first, 
the  common  medium  of  exchange;  second,  a  common  measure  or 
unit  of  account  by  which  the  comparative  values  of  other  things 
are  estimated;  third,  a  standard  by  which  future  payments  and 
obligations  are  determined  and  enforced. 

If  the  standard,  the  value  of  money  in  exchange,  is  changed  by 
contraction  or  expansion  of  volume,  then  equity  in  payment  is 
d  »feated  and  one  of  the  parties  in  the  contract  suffers  injustice. 

If  a  farmer  has  a  certain  number  of  dollars  to  pay  in  taxes,  on 
a  note,  or  in  any  other  obligation,  the  amount  being  fixed  when 
lu.;  general  range  of  prices  showed  the  dollar  worth  one  bushel  of 

177(1  '■' 


wheat,  it  will  double  the  burden  of  debt  and  rob  him  of  his  wheat 
to  c'hanj^e  the  dollar,  the  unit  of  account,  so  that  it  is  worth  two 
busliels  of  wheat,  and  does  the  farmer  the  same  injustice  as  it 
would  to  double  the  size  of  the  bushel  measure  or  an,'  other  stand- 
ard of  measure  and  settlement. 

So  with  the  products  of  the  factory,  held,  shop,  mine,  or  store. 
So  with  all,  rich  or  poor,  who  have  to  •)btain  dollars  in  exchan;.^e 
for  property,  products,  or  labor.  The  dollar  is  not  a  unit  of  vali.i 
when  its  purchasing  power  is  changed,  but  a  unit  of  account. 

Mr.  St.  John,  president  of  the  New  York  Mercantile  National 
Bank,  and,  in  my  jiidgment,  the  most  com])etent  and  patriotic 
bank  president  that  appeared  before  the  Banking  and  Currency 
Committee  at  its  recent  hearings,  pointed  out  (i)age  328)  that 
money  is  domestic — that  it  is  a  matter  of  national  legislation 
and  national  concern.  About  95  per  cent  of  oiir  ti'ading  is  done 
within  our  own  jurLsdiction.  and  besides  the  international  trade 
of  any  one  country  always  requires  translating  both  the  money 
and  the  measures  of  other  countries  into  its  own. 

Money  is  the  creature  of  law.  Money  is  all  domestic.  Our  ten-dollar  gold 
piece  is  accounted  2.58  gi'ains  of  nine-tenths  fine  gold  when  beyond  the  juris- 
diction of  the  United  States 

Money  and  the  yardstick  have  nothing  in  common.  The  yardstick  is  an 
exact,  unvarying  measure  of  length.  Money  is  an  uncertain,  variable  meas- 
ure of  varying  values.  The  yardstick  is  not  bartered  for  commodities. 
Money  is  the  means  of  acquisition  and  momentarily  the  measure  of  value  of 
the  things  required.  The  yardstick  is  a  unit  of  length.  The  dollar  as  a  "unit 
of  value"  is  preposterous.  Our  Hamilton -Jelferson  statute,  rounding  the 
mint,  provided  a  dollar  as  our  "unit  of  account."  That  dollarof  1792  and  the 
dollar  of  1894  contain  identically  371.25  grains  of  silver. 

AGGREGATE  OF  MONEY  DETERMINES  PRICES. 

The  aggregate  of  all  money  afloat  and  in  bank  in  the  United  States  is  our 
true  measure  of  normal  value  of  commodities  here.  The  aggregate  of  money 
of  all  nations  trading  internationally  is  the  measure  of  normal  value  of  all 
commodities  consumed  by  all.  Therefore,  to  enlarge  the  aggregate  of  money 
in  the  trading  world  is  to  raise  normal  prices  of  commodities  everywhere. 
To  enlarge  the  aggregate  of  money  in  the  United  States  is  to  raise  normal 
prices  for  home  and  internationally -consumed  commodities  here.  Per  con- 
tra, to  diminish  the  aggregate  of  money  in  the  United  States  is  to  lower  all 
normal  prices  here,  and  to  diminish  the  world's  aggregate  of  money  is  to 
lower  all  normal  prices  of  internationally-moving  conunodities  in  all  the  trad- 
ing world. 

In  reference  to  the  coinage  question,  so  ably  discussed  by  my 
friend  who  has  just  taken  his  seat  [Mr.  Bland],  I  desire  to  say 
that  I  indorse  in  the  main  what  he  has  said.  And  yet  I  wish  to 
call  attention  to  another  phase  of  the  currency  bill  before  us  that 
is  of  paramount  importance  to  a  realization  of  the  fact  that  this 
question  is  not  so  much  as  to  what  shall  be  the  material  of  money 
or  the  money  of  ultimate  redemption,  whether  it  shall  be  silver 

1770 


coin  or  gold  coin  or  uncovered  legal  tender-paper.  No  man 
who  is  competent  to  grasp  the  entire  currency  question  will  fail 
to  realize  that  it  is  the  volume  of  money  that  regulates  prices,  and 
therefore  regulates  profits  and  prosperity.  I  have  upheld  the  free 
coinage  of  silver,  as  you  all  know,  from  first  to  last.  I  believe  to- 
day it  is  a  practical  step  to  take,  not  so  much  that  it  is  the  only 
means  that  would  relieve  the  depression,  but  because  it  is  promi- 
nently before  the  country,  and  in  due  deference  to  the  deep-seated 
desire  on  the  part  of  the  people  in  many  parts  of  the  country,  and 
for  the  purpose  of  keeping  the  Democratic  pledges  to  the  people 
it  should  be  carried  forward  until  silver  coinage  is  restored. 

Mr.  Chairman,  the  American  Banking  Association  and  its  allied 
interests,  including  the  European  moneyed  interests  as  well  as  the 
American,  as  far  as  they  work  in  general  concert  of  purposes,  I 
wish  to  designate  under  the  general  terms  money  power  or  money 
dealers  or  bank  syndicate,  for  general  convenience,  and  not  for  the 
purposes  of  offense  or  abuse  of  persons  engaged  in  the  business  of 
banking. 

I  have  no  blame  to  cast  upon  those  engaged  in  the  business  of 
banking  under  the  laws  as  they  exist  or  as  they  may  exist. 

Every  man  has  a  right  to  engage  in  banking  under  such  laws  as 
are  made.  I  have  had  some  little  experience  in  banking,  and  my 
banking  investments  have  been  profitable. 

It  is  the  system  of  banking  and  the  character  of  financial  legis- 
lation and  the  unsound  arguments  and  vicious  methods  that  I 
would  attack  and  expose. 

In  my  judgment  the  monej^  power  and  their  advocates  have  in 
times  past  and  even  now  on  this  floor  are  seeking  to  avoid  the 
main  issue  and  conceal  from  the  general  public  their  main  pur- 
poses in  all  the  proposed  legislation  before  us. 

The  main  question  and  the  most  important  issue  is  who  shall 
control  the  quantity  or  volume  of  currency  in  general  circulation. 

Their  main  purpose  is  to  secure  to  themselves  as  a  general  class 
of  money  dealers  the  power  to  expand  or  contract  the  volume  of 
currency  suddenly  and  entirely  at  their  own  option,  so  to  control 
the  value  of  money  and  credits  in  their  relation  to  property  and 
prices. 

BANKS  SEEK  THE  CONTROL  OF  THE  VOLUME  IN  CIRCULATION. 

Whoever  controls  the  general  volume  of  currency  in  circulation 
controls  the  general  range  of  prices,  and  prices  control  property 
values,  wages,  profits,  and  the  opportunities  for  general  prosperity, 
and  these  things  involve  the  welfare  of  mankind. 

Believing  these  things,  Mr.  Chairman,  and  even  knowing  them  as 
certainly  as  anything  can  be  known  in  any  of  the  ordinary  sciences, 
how  can  I  sit  silent  and  unconcerned  in  this  Hall,  and  in  the  midst 
1770 


of  these  debates,  and  see  any  proposition  carried  to  turn  this  all-im- 
portant control  over  the  money  volume  and  a  new  lease  and  exten- 
sion of  power  into  the  hands  of  banking  corporations?  This  places 
control  out  of  the  reach  of  the  people  and  the  Government,  which 
is  in  '^uty  bound  to  protect  the  people. 

Sir  Robert  Peel  said,  when  he  brouglit  forward  in  Parliament  his 
bill  for  the  reform  of  the  currency,  in  1844,  in  describing  the  im- 
portance of  the  question  to  all  interests  and  people: 

There  is  no  contract,  public  or  private— no  engagement,  national  or  individ- 
ual, which  is  unaffected  by  it.  The  enterprises  of  commerce,  the  profits  of 
trade,  the  arrangements  made  in  all  the  domestic  relations  of  society,  the 
wages  of  labor,  pecuniary  transactions  of  the  highest  amounts  and  of  the 
lowest,  the  payment  of  the  national  debt,  the  provision  for  the  national  ex- 
penditure, the  command  which  the  coin  of  the  smallest  denomination  has 
over  the  necessaries  of  life,  are  all  affected  by  the  decision  to  which  we  may 
come  on  that  great  question  which  I  am  about  to  submit  to  the  consideration 
of  the  committee. 

Every  man,  woman,  and  child  in  this  country  is  vitally  inter- 
ested in  this  question,  and  so  long  as  I  represent  them  even  the 
poorest  and  humblest  citizens  in  the  State  of  Wyoming  shall  have 
the  satisfaction  of  knowing  that  their  interests  are  neither  for- 
gotten nor  bartered  away  and  surrendered  to  the  money  power. 

THE  QUANTITY   OF  CUKRENCY   IV  CIRCULATION  RKOULATES  PRICES. 

The  philosophy  of  this  (lue.'^tion  is  in  this  fact,  that  it  is  the  total 
volume  of  money  in  circulation,  whatever  its  form  and  without 
regard  to  its  material,  that  controls  the  value  of  every  dollar  as 
far  as  its  monetary  use  is  concerned.  I  see  there  are  a  few  in  my 
presence  who  are  inclined  to  question  this  proposition,  especially 
some  of  my  colleagues  on  the  Coinage  Committee,  but  I  say  to  you 
that  aU  competent  authorities  almost  without  exception  are  agreed 
upon  that  fact.  There  are  no  leading  authorities  in  the  universi- 
ties of  any  land  or  continent,  or  any  noted  authorities,  I  believe, 
except  one  or  two,  but  what  have  finally  acknowledged  the  point 
that  it  is  the  aggregate,  the  entire  quantity  of  money  or  niimber 
of  units  in  circulation,  that  regulates  the  value  of  every  iinit  or 
dollar  for  the  time  being.  Therefore,  the  free  coinage  of  silver, 
great  question  as  it  is,  bringing  up  the  great  injustice  that  has 
been  done  the  people  by  its  demonetization,  all  of  which  I  admit 
and  claim,  stiU  is  an  incidental  question  to  the  currency  question. 
Then,  what  is  the  issue  before  us  to-day?  The  issue  in  which  the 
people  are  most  vitally  interested  is  practically  who  shall  control 
tne  volume  in  circulation? 

I  will  submit  authorities  to  you  in  extended  remarks  to  show 
you  that  it  is  the  aggregate  volume,  without  particiilar  reference 
to  the  material  of  which  the  units  are  composed,  that  regulates 
the  value. 

ITTO 


Mr.  MONEY.  Will  the  gentleman  allow  me  to  ask  him  a  ques- 
tion? 

Mr.  COFFEEN  of  Wyoming.     Yes. 

Mr.  MONEY.  I  want  to  understand  the  matter.  Do  you  con- 
tend that  it  is  the  volume  of  currency  circulating  in  thia  country 
that  regtdates  prices  here? 

Mr.  COFFEEN  of  Wyoming.    Yes. 

Mr.  MONEY.  Or  that  it  is  the  volume  of  currency  in  the  world 
that  regulates  the  prices  of  articles  of  universal  consumption? 

Mr.  COFFEEN  of  Wyoming.  I  intended  to  treat  of  that  later, 
but  I  will  take  that  up  now.  The  prices  in  every  nation  are  regu- 
lated on  the  basis  of  the  money  of  that  nation,  and  we  should  not 
forget  that  monetary  systems  are  of  national  and  local  concern, 
and  not  international ,  as  some  suppose.  There  is  no  "  money  of  the 
world." 

Exports  and  imports  are  regulated  purely  and  entirely  in  the  ex- 
(diange  of  merchandise  for  merchandise,  and  they  are  always 
translated  into  the  local  monetary  system  of  the  country  dealt 
with.  Therefore,  in  answer  to  the  gentleman,  who  has  put  a  very 
pertinent  and  proper  question,  I  will  say,  without  fear  of  success- 
ful contradiction,  that  the  prices  in  this  country,  named  in  the  cir- 
culating money  of  this  country,  will  depend  on  the  aggregate 
niunber  of  units  in  circulation  in  this  country,  as  they  will  depend 
and  be  named  in  every  other  country  upon  their  respective  mone- 
tary systems. 

Mr.  MONEY.    Now,  I  do  not  want  to  interrupt  you 

Mr.  COFFEEN  of  Wyoming.  This  is  no  interruption.  I  think 
this  is  profitable. 

Mr.  MONEY.  Then,  if  that  is  true,  would  the  increase  of  the 
volume  of  circulation  in  this  country  raise  the  price  of  cotton  and 
wheat  in  this  country,  without  regard  to  the  universal  volume  of 
currency  in  the  world  and  the  demand  for  those  two  articles? 

Mr.  COFFEEN  of  Wyoming.  That  is  a  proper  question,  and 
we  ought  to  be  able  to  answer  such  questions  as  that.  Those 
products  that  are  produced  in  this  country  beyond  the  capacities 
of  this  country  to  consume,  and  which  depend,  therefore,  on  ex- 
port for  their  market,  will,  without  regard  to  prices  named  in  our 
money,  be  at  least  partially  influenced  in  price  named  in  the  foreign 
money  by  the  foreign  market. 

But,  going  on  now  from  where  we  left  the  question,  who  shall 
control  the  volume  of  money  in  circulation? 

From  the  very  nature  of  the  case,  as  I  shall  undertake  to  show 
a  little  further  on,  the  volume  or  quantity  of  money  in  general 
circulation  controls  and  regulates  the  general  range  of  prices  on 
commodities. 

1770 


8 

As  money  appreciates  property  and  price  depreciate.  As  the 
volume  of  money  increases  prices  of  all  commodities  increase 
generally  in  the  same  ratio;  but  increasing  the  volume  of  money 
cheapens  the  value  of  the  dollars  or  units  of  account,  which  is  the 
cause  of  the  increase  of  general  prices. 

So  again,  to  contract  or  diminish  the  volume  of  money  increases 
the  value  or  purchasing  power  of  the  dollars  or  units,  which  lowers 
the  price  of  commodities. 

Hence  we  state  the  general  proposition,  that  to  increase  or  de- 
crease the  value  or  jiurchasing  power  of  money  has  directly  op- 
posite effect  on  the  value  or  price  of  all  commodities  and  properties 
exchanged  for  money.  It  is  folly,  then,  for  the  money  power  to 
claim  that  they  want  good,  high-priced  money  and  plenty  of  it. 
To  make  money  plenty  cheapens  it,  and  while  cheaper  money  is 
both  good  and  honest  money,  if  kept  in  due  proportion  to  the  needs 
of  the  country,  honest  and  helpful  to  all  who  have  aught  to  sell 
or  pay,  yet  the  money  dealers  want  high  purchasing  power  money, 
and  they  know,  or  ought  to  know,  that  scarcity  produces  it. 
There  is  no  such  thing  possible  as  high-priced  money  and  "  plenty 
of  it." 

To  prove  this  elemental  truth  of  monetary  science,  that  volume 
of  currency  in  circulation  controls  the  general  range  of  prices,  I 
submit  the  following  authorities;  but  in  general  let  me  say  that 
all  competent  authorities  in  both  Europe  and  America  are  nearly 
unanimous  in  their  recognition  of  this  principle. 

John  Stuart  Mill  says: 

That  an  increase  of  the  quantity  of  money  raises  prices,  and  a  diminution 
lowers  them,  is  the  most  elementary  proposition  in  the  theory  of  currency. 

The  authorities  on  this  quantitative  theory  of  money  have  been 
so  thorougly  collated  by  Senator  John  P.  Jones,  and  given  in 
his  great  speech  on  the  question  of  repeal  of  the  silver-purchase 
law  in  October,  1893,  that  I  shall  quote  a  number  of  them  as 
given  by  him,  and  in  connection  shall  quote  a  part  of  what  the 
Senator  himself  had  to  say  on  this  topic.  I  regard  the  great 
Senator  himself  as  even  a  greater  authority  on  almost  every 
phase  of  the  money  question  than  many  of  the  noted  wi-iters  from 
whom  he  makes  quotations: 

I  shall  now  proceed  to  speak  of  the  quantitative  theory  of  money.  I  wish 
to  say,  i)reliminai*ily,  that  I  have  heard  no  Senator  deny  the  scientific  correct- 
ness of  that  theory;  yet  if  it  be  correct,  the  so-called  standard  of  gold  is  a 
standard  of  gross  injustice. 

But  there  is  one  principle  of  monetary  science  that,  if  held  steadfastly  in 
view,  will  constitute  an  unerring  guide  through  what  would  otherwise  be  a 
path  of  inextricable  diflficulty. 

That  principle  is  that  the  value  of  the  unit  of  money  in  any  country  is  de- 
1770 


9 

termined  by  the  number  of  units  in  circulation.    In  other  words  the  value  of 
every  dollar  depends  on  the  number  of  dollars  out. 

The  greater  the  number  of  dollars  out,  other  things  being  equal,  the  less 
■will  be  the  value  of  each  dollar;  the  fewer  the  number  out,  other  things  re- 
maining the  same,  the  greater  the  value  of  each— and  this  without  any  regard 
whatever  to  the  material  of  which  the  dollars  are  composed.  This  is  the  key 
to  the  financial  situation  in  the  United  States.  Much  more;  it  is  the  key  to 
the  financial  situation  in  every  land.  Without  this  key  it  is  in  vain  that  the 
student  attempts  to  unlock  the  door  leading  to  the  Arcanum  of  monetary 
knowledge.  Unlike  many  of  the  locks  made  by  man,  the  lock  on  that  door  is 
unpickable.  The  household  of  science  is  one  that  thieves  can  not  break 
through  and  steal.  He  who  would  enter  must  first  find  the  key.  "With  this 
key  in  hand  the  most  secret  recesses  may  be  explored  with  confidence. 
Without  it  the  student  travels  in  a  circle — returning,  after  much  labor,  to 
the  point  from  which  he  started  upon  his  journey.  Like  one  in  a  maze,  when 
most  confidently  expecting  to  find  his  way  out,  he  but  sees  himself  coming  up 
against  impassable  barriers. 

To  the  possessor  of  this  theory  and  of  an  impartial  mind,  that  is  to  say,  a 
mind  in  search  of  truth  for  truth's  sake,  there  is  no  phenomenon  of  industry, 
of  commerce,  or  of  finance  that  is  not  accounted  for.  With  it,  all  facts  in  the 
monetary  world  harmonize.  All  the  teachings  of  history  illustrate  its  force. 
It  has  therefore  for  support  both  reason  and  experience.  It  resolves  all  doubts, 
unriddles  all  enigmas,  makes  clear  that  which,  without  it,  would  be  an  insolu- 
ble problem  of  political  economy.  But,  in  order  to  receive  all  the  benefits  of 
truth,  men  must  not  approach  the  investigation  with  a  predetermination  to 
prove  some  special  theory.    The  truth  is  always  its  own  justification. 

No  Senator  will  rise  ia  his  place  and  deny  that,  other  things  being  equal, 
the  value  of  each  unit  of  money  in  a  country  depends  on  the  total  number  of 
units  forming  the  monetary  circulation  of  that  country.  No  Senator  will  at- 
tempt to  deny  that,  all  other  things  remaining  the  same,  the  prices  of  prop- 
erty and  commodities  in  a  country  are  regulated  by  the  number  of  units  con- 
stituting the  monetary  circulation  of  the  country;  and  by  the  "number  of 
units"  I  mean,  of  course,  for  this  country  the  number  of  dollars,  for  France 
the  number  of  francs,  for  Great  Britain  the  number  of  pounds  sterling,  etc. 

The  quantitative  theory,  Mr.  President,  is  not  new.  In  the  third  century 
of  the  Christian  era  the  Roman  jurisconsult  Paulus  gave  a  description  of 
money,  which  indicates  the  acceptance  at  that  early  period  of  the  principle 
of  quantity  as  that  to  which  the  money  unit  owed  its  value.  I  invite  special 
attention  to  this  clear-cut  statement: 

"  The  origin  of  buying  and  selling" — 

Says  Paulus — 
"  goes  back  to  barter.  Primitively,  there  was  no  money.  One  thing  was  not 
called  'merchandise'  and  the  other  'price,'  but  everyone,  according  to  his 
needs  and  according  to  his  circumstances,  bartered  things  useless  to  htm  for 
those  which  would  be  useful  to  him,  for  it  often  happens  that  what  one  has 
too  much  of  another  lacks.  But  as  it  would  not  always  or  easily  happen  that 
you  had  what  I  should  have  wished  for,  and  that,  conversely,  I  had  what  you 
wisned  to  obtain,  choice  was  made  of  a  material  which,  being  declared  forever 
legal  value,  would  obviate  the  difficulties  of  barter  by  means  of  a  quantitative 
equation.  And  this  material,  stamped  in  the  corner  by  the  State,  circulates 
with  a  power  which  it  derives  not  from  the  substance  but  from  the  quantity. 
Since  that  time,  of  the  things  thus  exchanged  one  is  called  merchandise  and 
the  other  is  called  price." 

This  description  was  deemed  worthy  to  be  incorporated  in  the  Pandects  of 
Justinian,  compiled  and  promulgated  in  the  sixth  century,  thus  demonstrat- 
1770 


10 

ing  that  the  lapse  of  three  hundred  years  had  not  rendered  it  obsolete.    It  is 
as  sonnd  to-day  as  it  was  when  first  written. 

John  Locke,  in  his  Considerations,  relating  to  the  value  of  money,  said: 

••  Money,  while  the  same  quantity  of  it  is  passing  up  and  down  the  kingdom 
in  trade,  is  really  a  standing  measure  of  the  falling  and  rising  value  of  other 
things  in  reference  to  one  another,  and  the  alteration  in  price  is  trulj'^  in  them 
only.  But  if  you  increase  or  lessen  the  quantity  of  money  current  in  traffic 
in  any  place,  then  the  alteration  of  value  is  in  the  money." 

Locke  further  said : 

'•  The  value  of  money  in  any  one  country  is  the  present  quantity  of  the  cur- 
rent money  m  that  country  in  proportion  to  the  ])resent  trade." 

David  Hume,  the  historian,  says: 

"It  is  not  difficult  to  perceive  that  it  is  the  total  quantity  of  the  money  in 
circulation  in  any  country  which  determines  what  portion  of  that  quantity 
shall  exchange  for  a  certain  portion  of  the  goods  or  commodities  of  that 
country.  It  is  the  proportion  between  the  circulating  money  and  the  com- 
modities in  the  market  which  determines  the  price." 

Ficth*'  says: 

"If  the  quantity  of  purchasable  articles  increases,  while  the  quantity  of 
money  remains  the  same,  the  value  of  the  money  increases  in  the  same  ratio; 
if  the  (luantity  of  money  increases,  while  the  quantity  of  purchasable  arti- 
cles remains  the  same,  the  value  of  the  money  decreases  in  the  same  ratio." 

James  Mill,  in  his  tr'^atiso  on  Political  Economy,  says: 

"And  again,  in  wh.atever  degree,  therefore,  the  quantity  of  money  is  in- 
creased or  diminished,  other  things  remaining  the  same,  in  that  same  propor- 
tion the  value  of  the  whole  and  of  every  part  is  reciprocally  diminished  or 
increased." 

John  Stuart  Mill  (Political  Economy)  says: 

"The  value  of  monej-,  other  things  being  the  same,  varies  inversely  as  its 
quantity;  every  increase  of  quantity  lowering  the  value,  and  every  diminu- 
tion raising  it  in  a  ratio  exactly  equivalent." 

And  .again,  as  I  have  already  quoted  in  connection  with  my  remarks  on  cost 
of  proiluction,  Mr.  Mill  says: 

"Alterations  in  the  cost  of  the  production  of  the  precious  metals  do  not  act 
upon  the  value  of  money,  except  just  in  proportion  as  they  increase  or  dimin- 
ish its  quantity." 

Ricardo  (Reply  to  Bosanquet)  says: 

"  The  value  of  money  in  any  country  is  determined  by  the  amount  existing. 
That  commodities  would  I'ise  or  fall  in  price  in  proportion  to  the  increase  or 
diminution  of  money  I  a.ssume  as  a  fact  that  is  incontrovertible." 

Ricardo  further  says: 

"  There  can  exist  no  depreciation  in  money  but  from  exce.ss;  however  de- 
based a  coinage  may  become,  it  will  preserve  its  mint  value;  that  is  to  say, it 
will  pass  in  circulation  for  the  (so-called)  intrinsic  value  of  the  bullion  which 
it  ought  to  contain,  provided  it  be  not  in  too  great  abundance." 

Jorfn  Stuart  Mill  again  says: 

"  We  have  seen,  however,  that  even  in  the  case  of  metallic  currency  the 
immediate  agency  in  determining  its  value  is  its  quantity.— Principiea  of 
Political  Economy,  volume  II,  page  89." 

WiUiam  Huskisson  (The  Depreciation  of  the  Currency,  1819)  says: 

"  If  the  quantity  of  gold  in  a  country  whose  currency  consists  of  gold  should 
be  increased  in  any  given  proportion,  the  quantity  of  other  articles  and  the 
demand  for  them  remaining  the  same,  the  value  of  any  given  commodity 
measured  in  the  coin  of  that  country  would  be  increased  in  the  same  propor- 
tion." 

1770 


Sir  James  Graham  says: 

"  The  value  of  money  is  in  the  inverse  ratio  of  its  quantity;  the  supply  of 

commodities  remaining  the  same." 

Torrens,  In  his  work  on  Political  Economy,  says: 

"If  the  value  of  all  other  commodities,  in  relation  to  gold,  rises  and  falls  as 
their  quantities  diminish  or  increase,  the  value  of  gold  in  relation  to  com- 
modities must  rise  and  fall  as  its  quantity  is  diminished  or  increased." 

Professor  De  Colange,  in  the  American  Cyclopedia  of  Commerce,  article 
"Money,"  says: 

"  The  rate  at  yjhich  money  exchanges  for  other  things  is  determined  by  its 
quantity.  *  *  *  Supposing  the  amount  of  trade  and  mode  of  circulation 
to  remain  stationary,  if  the  quantity  of  money  be  increased  its  value  will  fall 
and  the  price  of  other  commodities  will  proportionately  rise,  as  the  latter 
will  then  exchange  against  a  greater  amount  of  money;  if,  on  the  other  hand, 
the  quantity  of  money  be  reduced,  its  value  will  be  raised,  and  prices  in  cor- 
responding degree  diminished,  as  commodities  will  then  have  to  be  exchanged 
for  a  less  amount  of  money.  *  *  *  In  whatever  degree,  therefore,  the 
quantity  of  money  is  increased  or  diminished,  other  things  remaining  the 
same,  in  that  same  proportion  the  value  of  the  whole  and  of  every  part  is  re- 
ciprocally diminished  or  increased." 

Says  Professor  Sidgwick,  of  Cambridge  University: 

"The  exchange  value  of  any  particular  coin  will  vary  in  exactly  inverse  ra- 
tio to  the  variations  in  quantity  of  the  aggregate.— Principiles  of  Political 
Economy,  page  251." 

DOES  THE  MATERIAL  IN  MONEY  CONTROL  ITS  VALUE? 

Now,  having  established  the  fact  beyond  any  danger  of  success- 
ful contradiction  that  the  value  of  money  is  controlled  by  the 
number  of  units  in  circulation,  and  since  a  few — mostly  novices 
in  the  study  of  monetary  questions,  or  special  pleaders  for  special 
interests — still  hold  and  advocate  that  it  is  in  whole  or  in  part  the 
value  of  the  material  of  which  money  is  composed  that  regulates 
its  value,  I  wish  to  take  up  this  feature  of  the  question  and  we 
will  find  that  it  is  equally  clear  that  withoiit  regard  to  the  material 
of  which  convenient  forms  of  money  are  composed,  still  the  vol- 
ume in  circulation  regulates  the  value  for  monetary  purposes. 

This  rule  applies  even  to  the  circulation  of  uncovered  paper 
money,  whether  issued  by  the  banks  or  by  the  Government,  as 
long  as  it  is  kept  in  general  circulation,  and  so  the  values  of  gold 
dollars  and  silver  dollars  themselves,  by  adding  paper  money  to 
the  volume,  are  affected,  and  diminished  or  increased  according 
as  the  quantity  of  paper  money  is  increased  or  decreased.  On  a 
former  occasion,  when  the  repeal  of  State-bank  tax  was  before  us, 
I  tried  to  make  this  clear  to  all. 

This  fact  and  a  true  recognition  of  the  effect  of  expanding  or 
contracting  the  amount  of  paper  currency  in  circulation  is  essen- 
tial in  any  proper  discussion  of  the  question  of  empowering  banks 
to  issue  what  they  call  an  elastic  currency  or  of  issuing  any  cur- 
rency whatever,  or  withdrawing  any  from  circulation. 
1770 


12 

Senator  Jones  gives  valuable  testimony  again.     He  sayp: 

So  absolutely  clear  are  the  leading  writers  that  the  value  of  the  money  unit 
is,  in  every  case,  other  things  being  equal,  determined  by  the  number  of 
units  out,  and  does  not  depend  on  the  material  of  which  the  money  may  be 
composed,  that  they  have  not  the  slightest  hesitation  in  asserting  that  the 
rule  applies  even  to  uncovered  paper  money,  so  that  the  value  of  every  dol- 
lar of  gold  and  silver  in  circulation  is  diminished  or  increased,  according  as 
the  quantity  of  paper  money  is  increased  or  diminished;  and  reciprocally  as 
to  all  of  these,  the  increase  in  the  number  of  dollars  of  either  kind  diminish- 
ing the  value  of  each  dollar  of  the  others,  while  the  decrease  in  the  number 
of  either  increases  the  value  of  each  of  the  others,  without  the  slightest  re- 
gard whatever  to  the  material  of  which  either  of  the  dollars  is  composed. 

If  this  be  so,  if  the  value  of  the  unit  of  money  depends  not  on  the  material 
of  the  dollars  but  on  their  quantity,  what  becomes  of  the  gold  standard?  If 
this  V)e  so,  inasmuch  as  silver  has  been  utilized  as  money  since  the  dawn  of 
creation,  why  abandon  it  now,  unless  Senators  are  prepared  to  abandon  the 
automatic  system  altogether?  If  we  must,  by  legislation,  compel  a  change  in 
the  value  of  money  (for  that  is  what  this  measure  means),  why  legislate  so 
that  it  can  change  in  one  direction  only,  and  that  the  direction  which  is  al- 
ways favorable  to  the  classes  that  lend  money  and  live  idly  on  their  incomes — 
the  direction  most  injurious  to  society,  most  fatal  to  industry,  most  narcotiz- 
ing to  energy? 

I*rof .  Stanley  Jevons,  in  his  work  on  Money  and  Mechanism  of  Exchange, 
says: 

"  There  is  plenty  of  evidence  to  prove  that  an  inconvertible  paper  money,  if 
carefully  limited  in  quantity,  can  retain  its  full  value.  Such  was  the  case 
with  the  Bank  of  England  notes  for  several  years  after  the  suspension  of 
specie  payments  in  1797,  and  such  is  the  case  with  the  present  notes  of  the 
Bank  of  France." 

In  his  proposal  for  an  economic  and  secure  currency,  the  great  authority, 
Ricardo,  himself  a  most  acute  dealer  in  money,  says: 

"A  well-regulated  paper  currency  is  so  great  an  improvement  in  commerce 
that  I  should  greatly  regret  if  prejudice  should  induce  us  to  return  to  a  sys- 
tem of  less  utility.  The  introduction  of  the  precious  metals  for  the  purposes 
of  money  may  with  truth  be  considered  as  one  of  the  most  important  steps 
toward  the  improvement  of  commerce  and  the  arts  of  the  civilized  life;  but 
it  is  no  less  true,  that  with  the  advancement  of  knowledge  and  science,  we 
discover  that  it  would  be  another  improvement  to  banish  them  again  from 
the  employment  to  which,  during  a  less  enlightened  period,  they  had  been  so 
advantageously  applied." 

The  distinguished  economist  and  editor,  Mr.  J.  R.  McCulloch,  in  comment- 
ing on  the  principles  of  money  laid  down  by  Ricardo,  says: 

"He  examined  the  circumstances  which  determine  the  value  of  money 
*  ♦  *  and  he  showed  that  *  *  *  its  value  will  depend  on  the  extent  to 
which  it  may  be  issued  compared  with  the  demand.  This  is  a  principle  of 
great  importance,  for  it  shows  that  intrinsic  worth  is  not  necessary  to  a  cur- 
rency, and  that,  provided  the  supply  of  paper  notes  declared  to  be  a  legal  ten- 
der be  sufficiently  limited,  their  value  may  be  maintained  on  a  par  with  the 
value  of  gold,  or  raised  to  any  higher  level.  If,  therefore,  it  were  practicable 
to  devise  a  plan  for  preserving  the  value  of  ijaper  on  a  level  with  that  of 
gold,  without  making  it  convertible  into  coin  at  the  pleasure  of  the  holder, 
the  heavy  expense  of  a  metallic  currency  would  be  saved. 

"It  appears,  therefore,  that  if  there  were  security  that  the  power  of  issuing 
paper  money  would  not  be  abused;  that  is,  if  there  were  perfect  security  for 
1770 


13 

its  being  issued  in  such  quantities  as  to  preserve  its  value  relatively  to  the 
mass  of  circulating  commoditiea  nearly  equal,  the  precioiis  metals  might  be 
entirely  dispensed  with,  not  only  as  a  circulating  medium,  but  also  as  a  stand- 
ard to  which  to  refer  the  value  of  paper. " 

Lord  Overstone  also  admits  that  irredeemable  paper  money  can,  by  a  proper 
limitation  of  its  issues,  be  kept  at  par  with  gold. 

"In  adopting  a  paper  circulation—" 

He  says — 

"  We  must  unavoidably  depend  for  a  maintenance  of  its  due  value  upon  the 
adojition  of  a  strict  and  judicious  rule  for  the  regulation  of  its  amount." 

Supporting  this  view  we  find  also  that  Alexander  Baring,  in  his  evidence 
before  the  secret  committee  of  the  House  of  Lords  in  1819,  said: 

"The  reduction  of  paper  would  produce  all  those  effects  which  arise  from 
the  reduction  in  the  amount  of  the  money  in  any  country." 

An  early  and  distinguished  authority  in  our  own  country,  Mr.  Gallatin, 
said: 

'•  If  in  a  country  which  wants  and  possesses  a  metallic  currency  of  |70,0()0,000 
a  paper  currency  to  the  same  amount  should  be  substituted,  the  seventy  mil- 
lions in  gold  and  sUver,  being  no  longer  wanted  for  that  purpose,  wUl  be  ex- 
ported, and  the  returns  miay  be  converted  into  a  productive  capital  and  add 
an  equal  amount  to  the  wealth  of  the  country." 

When  we  know  that  these  are  views  of  the  leadLig  writers— all  uniting  in 
the  assertion  that  that  wtiioh  determines  the  value  of  money  is  the  quantity, 
not  the  material — it  must  excite  our  special  wonder  that  Senators  jiropose  to 
destroy  silver  as  money  of  final  payment,  or  to  repeal  a  law  which  by  its  slight 
addition  to  the  quantity  of  money  has  at  least  tended  to  maintain,  in  some 
degree,  among  us  the  equities  of  time  contracts  and  deferred  payments. 
When  the  Senators  know  that  all  great  projects  in  this  country  on  which 
the  employment  of  labor  depends,  are  based  upon  the  prices  of  commodities, 
and  that  when  those  prices  are  constantly  faUing  workingmen  must  be  rel- 
egated to  idleness,  that  every  debt  must  be  paid  in  a  dollar  of  increasing 
value,  to  the  ruin  of  merchants  and  of  the  projectors  of  industrial  enter- 
prises in  which  labor  should  be  employed,  it  is  incomprehensible  how  they 
can  advocate  the  establishment  in  this  country  of  a  gold  standard,  or  of  any 
standard,  except  such  as  will  furnish  a  sufficient  volume  of  money  for  the 
business  of  the  people. 

With  reference  to  Ricardo  it  is  to  be  borne  in  mind  that  his  profession  was 
that  of  stockbroker.  Hence  we  must  make  allowance  for  his  desire  to  main- 
tain the  gold  standard,  knowing,  as  he  very  well  knew,  that  the  gold  stand- 
ard meant  a  certain  level  of  prices  for  commodities — that  is  to  say,  that  it 
did  not  mean  the  possession  of  gold,  but  the  ability  of  money  lenders,  cred- 
itors, and  the  idle  aristocracy  and  income  classes  of  Great  Britain  to  obtain 
all  the  comforts  and  luxuries  of  life  at  a  level  of  prices  getting  constantly 
lower. 

In  a  paragraph  of  the  twenty -seventh  chapter  of  his  work  on  Political 
Economy,  Ricardo  makes  the  broad  statement  that  a  nation  may  be  on  the 
gold  standard  without  having  a  solitary  dollar  of  gold  within  its  entire  ter- 
ritory, provided  only  that,  whatever  may  be  the  form  of  its  money,  the  num- 
ber of  the  units  of  that  money  shall  not  exceed  the  number  of  gold  imits 
which,  if  the  country  used  gold  money,  would  be  its  distributive  portion  of 
the  gold  of  the  world.  That  proportion  is,  of  course,  fixed  by  the  general 
range  of  prices.    Ricardo's  statement  is: 

"  A  currency  is  in  its  most  perfect  state  when  it  consists  wholly  of  paper 
money,  but  of  paper  money  of  an  equal  value  with  the  gold  which  it  pro- 
fesses to  represent.    The  use  of  paper  instead  of  gold — " 
1770 


14 

He  continues — 
"substitutes  the  cheapest  in  place  of  the  most  expensive  medium,  and  ena- 
bles the  country,  without  loss  to  any  individual,  to  exchange  all  the  gold, 
which  before  it  used  for  this  purpose  for  raw  materiaLs,  utensils,  and  food— 
by  the  use  of  which  both  its  wealth  and  its  enjoyments  are  increased." 

It  will  be  remembered  that  on  Saturday  I  demonstrated,  by  citations  from 
the  leadin)^  writers  that  money  has  no  value  whatever  except  value  in  ex- 
change—purc-hasing  power— and  that  when  the  term  "  value  of  money  "  is 
used,  it  means  only  purchasing  power  and  not  any  value,  which,  for  commod- 
ity purposes,  might  attach  to  the  material  of  which  it  is  composed. 

"  By  limiting  its  quantity — " 

Ricardo  says — 
"its  value  in  exchange — " 

Which,  as  I  have  said,  is  the  only  value  that  money  has — 
"ls  as  great  as  an  equal  denomination  of  coin,  or  of  bullion  in  that  coin." 

And  he  very  properly  adds: 

"  There  is  no  point  more  important  in  issuing  paper  money  than  to  be  fully 
impressed  with  the  effects  which  follow  from  the  principle  of  limitation  of 
quantity." 

Of  course  there  is  no  point  more  important  than  that.  The  principle  of 
limitation  of  quantity  is  of  the  very  essence  of  the  value  of  m.oney,  of  what- 
ever material  it  may  be  composed. 

If  money  were  unlimited  in  quantity  it  would  have  no  value  whatever. 
Nothing  has  value  that  is  unlimited  in  quantity.  If,  instead  of  sand,  the 
ocean  beach  were  strewn  with  gold  dust,  it  would  have  no  value  whatever 
as  a  commodity;  yet  if  that  gold  dust  were  taken  up  and  coined  into  pieces 
of  money,  the  number  of  such  pieces  being  limited,  they  would  have  value 
precisely  as  gold  pieces  have  value  to-day.  And,  on  the  other  hand  as  Adam 
Smith  says,  it  gold  should  reach  a  certain  degree  of  scarcity,  the  slightest 
bit  of  it  might  become  as  valuable  as  a  diamond. 

Bicardo,  leaving  no  form  of  the  statement  untouched,  recurs  to  the  sub- 
ject by  making  the  following  remark: 

"  On  these  principles  it  will  be  seen  that  it  isnotnecessm-y  that  paper  money 
should  be  payable  in  specie  to  secure  its  value;  it  is  only  necessary  that  ics 
quantity  should  be  regulated  according  to  the  value  of  the  metal  which  is 
declared  to  be  the  standard." 

If  it  is  not  necessary  for  paper  money,  in  order  to  be  of  equal  value  with 
gold  money,  to  be  payable  or  "  redeemable  "  in  gold,  how  can  it  be  asserted 
that  silver  money,  in  order  to  maintain  its  value  in  relation  to  gold,  should 
be  redeemable  in  that  metal?" 

Professor  Fawcett,  in  his  work  on  Political  Economy,  says: 

"  In  discussing  the  laws  of  price,  the  principle  was  established  that  general 
prices  depend  upon  the  quantity  of  money  in  circulation  compared  with  the 
wealth  which  is  bought  and  sold  with  money,  and  also  upon  the  frequency 
with  which  this  wealth  is  bought  and  sold  before  it  is  consumed.  If  more 
wealth  is  produced  and  an  increased  quantity  of  wealth  is  bought  and  sold 
for  money,  general  prices  must  decline  unless  a  larger  quantity  of  money  is 
brought  into  circulation.'''' 

When  Professor  Fawcett  says  that  "  general  prices  must  decline  unless  a 
larger  quantity  of  money  is  brought  into  circulation,"  be  is  but  stating  in 
another  form  of  phrase  that  the  value  of  money  increases  as  its  quantity 
diminishes.  This  is  the  quantitative  theory.  Professor  Fawcett  further 
says: 

"  The  amount  of  money  required  to  be  kept  in  circulation  depends  upon  the 
amount  of  wealth  which  is  exchanged  for  money.    Hence,  ceteris  paribus, 
1770 


15 

the  amount  of  money  ought  to  increase  as  the  population  and  wealth  of  a  coun- 
try advance. — Political  Economy,  page  371." 

If  the  amount  should  be  increased,  surely  the  increase  must  be  an  increase 
of  the  quantity. 

Mr.  N.  A.  Nicholson,  of  Oxford,  in  his  Science  of  Exchanges,  pays: 

"  Whatever  substance  may  be  used  as  currency,  an  excessive  quaiitity  of  it 
(more  than  is  required  by  the  wants  of  the  community)  necessarily  causes  a 
diminution  of  its  purchasing  power." 

To  show  that  even  gold  is  subject  to  the  same  law  of  quantity,  Mr.  Nichol- 
son asks: 

"  Could  a  currency,  then,  consisting  entirely  of  the  best  gold  coin  only,  be 
depreciated?" 

To  which  he  replies: 

"Certainly,  provided  that  the  exportation  of  gold  could  be  altogether  pre- 
vented, the  amount  in  use  would  soon  become  greater  than  what  was  re- 
quired by  the  wants  of  the  community,  and  its  purchasing  power  would 
diminish  in  the  same  proportion." 

What  Mr.  Nicholson  means  by  the  "wants  of  the  community"  is  the 
amount  of  money  necessary  to  sustain  prices  at  the  international  level. 

Earl  Grey,  writing  to  Mr.  Grenfell,  one  of  the  governors  of  the  Bank  of 
England,  and  referring  to  Ricardo,  says: 

"I  would  remind  you  (though  it  is  hardly  necessary  to  do  so)  that  in  his 
admirable  pamphlet  on  this  subject,  he  (Ricardo)  has  shown  the  value  of 
paper  money  issued  by  the  authority  of  the  state  to  depend  upon  its  amount 
as  compared  to  the  wants  of  the  state  in  which  it  circulates.  No  one,  I  be- 
lieve, now  doubts  this  to  be  true,  and  experience  has  proved  that  inconvert- 
ible paper  money  will  circulate  not  only  without  depreciation,  but  even  at  a 
premium  if  the  issues  are  sufiiciently  limited." — [Letter  from  Earl  Grey, 
dated  May  31,  1881.  Quoted  ia  The  Bimetallic  Controversy,  by  Gibbs  & 
Grenfell,  page  160.] 

Prof.  Shield  Nicholson,  of  Edinburgh,  in  an  article  in  the  Nineteenth  Cen- 
tury for  December,  1889,  states  that  every  economist  of  repute  since  Ricardo's 
time  has  been  an  advocate  of  the  quantitative  theory  of  money. 

Even  a  so-called  debased  coinage — that  is,  a  coinage,  each  piece  of  which 
contains  a  smaller  quantity  of  metal  than  the  law  prescribes — will  maintain 
itself  at  par  provided  the  total  number  of  coins  put  in  circulation  be  not  too 
large.  On  this  point,  as  I  have  shown,  Ricardo  says,  that  in  circulation  such 
coins  will  pass  for  the  quantity  of  metal  they  ought  to  contain,  provided  they 
be  "  not  in  too  great  abundance." 

With  reference  to  this  relation  of  quantity,  and  to  the  absolute  necessity 
of  an  increase  of  money  pari  passu  with  the  demands  for  it,  Professor  Perry, 
of  Williams  College,  says: 

"When,  however,  enterprises  are  multiplying  and  exchanges  are  being 
permanently  increased  in  number  and  variety,  then  there  must  be  a  larger 
volume  of  money." — Principles  of  Political  Economy,  page  409. 

With  regard  to  the  irredeemable  paper  notes  of  the  Bank  of  England,  issued 
on  the  suspension  of  specie  payments  in  1797,  Professor  Perry  says: 

"  Cautiously  issued  at  first,  bank  paper  continued  at  par  for  several  years 
after  the  suspension,  which  proves  that  when  Government  possess  the  mo- 
nopoly of  issuing  paper  money,  and  carefully  limits  its  quantity,  and  both 
receives  and  pays  it  out  at  par,  it  may  keep  an  inconvertible  paper  at  par,  or 
even  by  sufficiently  limiting  its  quantity  carry  it  above  par. 

How  do  gold-standard  Senators,  who  talk  of  a  sixty -cent  dollar,  explain  the 
fact  of  a  one-cent  paper  pound-sterling  being  at  par  with  gold,  or  even  at  a 
premium  over  gold,  without  a  penny's  worth  of  gold  existing  in  the  entii-e 
1770 


16 

kingrt  jm?  I  suppose  they  will  say  the  notes  were  sustained  bj'  the  "credit  of 
the  Government."  Then,  why  did  the  credit  uf  the  Government  allow  the 
nott-s  later  on,  when  they  were  isaued  in  larger  quantities,  to  depreciate  in 
vatue? 

.•i.11  these  great  aiithorities  ajrroo,  as  I  have  shown,  that  the  quantitative 
tbeory  of  money  is  correct,  and  that,  instead  of  applying  merely  to  gold,  it 
Mipplies  to  all  money  without  discrimination  or  distinction  of  material. 

VALUABLE  TESTIMONY  OF  DEL  MAR. 

Alexander  Del  Mar,  whose  very  philosophical  work  on  Money 
and  Civilization  I  have  examined  and  which  is  not  so  often  quoted 
as  this  author  deserves,  says  on  pages  11,  13,  and  18  of  his  intro- 
duction: 

At  long  and  adventitious  intervals,  like  those  great  tidal  waves  which  in- 
crease the  disturbance  of  an  always  disturbed  ocean,  ocoui-red  those  open- 
ings of  placer  c  iTitries — Spain,  Gaul,  Africa,  Spanish  America.  Brazil,  Cali- 
fornia, Australi.i— ea  ;h  of  which  caused  a  prodigiou.«  rise  of  prices  and  threw 
society  into  new    orms. 

Then,  as  if  he  would  guard  carefully  against  the  fretjuent  mis- 
take of  regarding  the  volume  of  coin  and  precious  metals  as  be- 
ing the  only  element  to  consider  in  the  volume  of  money  and  regu- 
lation of  value,  he  says: 

Of  all  money  now  (1886)  in  circulation  in  Europe  and  America  one-half  con- 
sists of  paper  notes.  If  these  notes  were  suddenly  demonetized  or  destroyed 
it  is  evident  that,  in  consequence  of  the  increased  work  which  each  coin  would 
have  to  perform,  its  value  or  purchasing  power  would  be  greatly  enhanced 
and  prices  would  fall.  On  the  other  hand,  to  the  extent  paper  notes  are 
added  to  the  circulation  prices  will  rise.  *  *  *  tj^^  purchasing  power  of 
the  precious  metaLs  is  susceptible  of  being  depressed  below  the  cost  of  pro- 
ducing them,  by  any  cii'cumstance  that  tends  suddenly  or  greatly  to  aug- 
ment the  volume  of  money  whenever  the  same  is  composed  wholly  or  partly 
of  such  metals 

He  has  brought  out  here  the  essential  point  in  determining  value 
of  coin  to  be  the  consideration  of  the  total  volume  of  both  coin 
and  paper  money  in  circulation,  and  this  should  be  understood 
better  than  it  is  by  both  mine  owners  and  those  engaged  in  other 
pursuits. 

Del  Mar  claims  that  in  his  Science  of  Money  he  has — 

Shown  by  numerous  arguments  and  references  to  history  that  money  did 
not  and  could  not  consist  of  any  less  number  of  coins  or  notes  than  the  whole 
number,  their  nature  being  such  that  they  could  not  be  used,  nor  could  their 
value  be  fixed  without  reference  to  one  another;  in  other  words,  that  the  unit 
of  money  Cfor  consideration  of  its  value)  was  all  money,  and,  therefore,  that 
its  value  depended  upon  its  volume;  *  *  *  that,  therefore,  money  was  related 
to  equity  or  the  maintenance  of  equitable  relations  between  capitalists  and 
laborers;  that,  like  other  measures,  the  most  necessary  and  essential  charac- 
teristic of  money  was  specific  limitation  (of  mass  or  volume);  in  other  words, 
that  to  measure  with  precision  and  with  justice  the  whole  sum  of  money 
must  be  fixed  at  some  more  or  less  constant  ratio  to  the  volume  of  exchange. 

But  while  quoting  from  Del  Mar  I  wish  also  to  enforce  the  point 
I  so  strongly  urge,  that  to  protect  property  interests  of  the  labor- 
1770 


17 

ing  world  and  the  rights  of  mankind  and  to  simplify  the  whole  sub- 
ject of  money  as  a  standard  of  eqiiity  among  the  people  the  State  or 
Government  must  hold  and  use  the  power  to  regulate  the  volume 
of  money,  all  kinds  of  money,  in  circulation,  and  to  this  end  can 
not  leave  the  coinage  and  issuance  of  either  paper  or  metal  money 
to  the  whims  and  interests  of  private  corporations. 

If  either  should  be  let  out  to  corporations  it  would  be  better  to 
let  out  to  them  the  coinage  of  the  precious  metals,  for  the  very 
limitations  on  their  production  will  keep  the  banks  within  ap- 
proximate bounds. 

In  speaking  of  the  legislation  of  about  two  centuries  ago  by 
which  the  leading  States  of  Europe  gave  over  their  control  of  vol- 
ume to  the  exigencies  of  mining  operations  and  "coinage  on  pri- 
vate account  and  option  Del  Mar  says,  pages  13  a^jd  14: 

Previous  to  the  act  of  1606  in  England  and  1679  in  France,  which  gave  free 
coinage  to  both  gold  and  silver  and  allowed  the  volume  ot  money  to  depend 
upon  the  exigencies  of  individiials  to  add  to  or  subtract  from  the  volume  of 
coin  at  their  will,  the  State  no  longer  keeping  control  of  volume,  as  it  should 
(seepages  327-229),  money  was  a  comparatively  simple  subject,  readily  un- 
derstood and  as  readily  susceptible  of  regulation. 

This  helps  us  to  understand  that  even  the  question  of  free  coin- 
age of  either  gold  or  silver  must  be  considered  in  relation  to  the 
effect  of  such  coinage  on  the  total  volume. 

We  must  never  forget,  if  we  would  simplify  and  grasp  the  money 
question,  that  it  is  the  volume  or  total  number  of  units  or  dollars 
in  circulation  that  controls  and  regulates  the  value  of  the  units 
and  regulates  the  general  range  of  prices  on  all  exchangeable  forms 
of  wealth  on  which  the  welfare  of  mankind  depends. 

Mr.  HAINER  of  Nebraska.  Will  the  gentleman  yield  for  a 
question? 

Mr.  COFFEEN  of  Wyoming.  I  can  with  pleasure  for  the  gen- 
tleman from  Nebraska. 

Mr.  HAINER  of  Nebraska.  The  gentleman  has  stated  that  the 
prices  are  governed  by  the  volume  of  currency  in  a  country. 
Now,  for  instance,  the  average  circulation  of  currency  in  this 
country  is  about  $25  per  capita.  In  China  it  is  about  $2  per  capita. 
Are  we  to  understand  that  prices  in  this  country  wiU  be  twelve 
times  what  they  are  in  China? 

Mr.  COFFEEN  of  Wyoming.  No;  I  am  not  speaking  of  per 
capita  circulation,  biit  of  the  effect  of  increasing  or  decreasing  the 
volume  in  circulation,  and  I  will  not  take  China  as  suitable  for 
illustration,  as  its  weights,  measures,  and  coins  are  so  very  differ- 
ent from  ours  that  I  would  not  be  able  to  make  the  comparison 
without  reference  to  text-books  and  tables,  even  if  I  were  talking 
of  per  capita.  Although  silver  dollars,  both  American  and  Mexi- 
1770 2 


18 

can,  are  current  there,  they  are  ncit  coined  officially.  The  only 
official  coinage  is  the  copper  cash,  wliich  iswortii  as  far  as  its  metal 
is  concerned  less  than  one- tenth  ( one-eleventh )  of  an  American  cent, 
or  1 .  100  to  the  dollar.  So  if  there  is  even  the  metal  worth  of  one  dollar 
per  capita  in  circulation  to  China's  400,000,000  people  itwUlgive  us 
over  four  hundred  thousand  millions  of  these  coins  in  China.  But 
their  money  value  may  be  very  different  from  their  value  as  mer- 
chandise, which  is  taken  as  a  basis  for  per  capita  circulation  tables 
probably.  Let  us  then  take  a  nation  a  little  nearer  home,  and 
whose  terms  and  coins  and  weights  are  better  understood. 

We  should  remember, too,  and  especially  with  reference  to  China, 
that  it  is  the  volume  of  currency  in  circulation  in  relation  to  the 
volume  of  business  and  work  for  money  to  perform. 

And  again,  let  us  remember  that  the  prices  in  one  country  must 
be  translated  into  a  different  money  system  in  another  for  com- 
parison. 

Mr.  HAINER  of  Nebraska.  Will  you  compare  this  country 
with  France  with  its  $3G  per  capita  circulation,  England  with  its 
$18,  or  Germany  with  about  the  same? 

Mr.  COFFEEN  of  Wyoming.  In  England  the  price  of  wheat 
is  about  20  shillings  per  quarter.  That  will  be  a  good  product  for 
a  basis,  since  wheat  has  been  already  mentioned.  It  is  probable 
that  if  we  by  issuing  legal  tenders  double  our  volume  of  money 
and  leave  silver  demonetized,  it  will  very  slightly  affect  the  20 
shillings  per  quarter,  raising  the  price  for  wheat  in  England;  but 
while  that  may  be  true,  you  must  not  forget  that  it  will  double 
the  price  of  wheat  in  this  country,  measured  in  our  own  dollar. 
But  if  we  open  our  mints  to  free  coinage  of  silver  at  $1  for  every 
412i  grains  of  it  nine-tenths  fine,  it  will  about  double  the  price  of 
silver  instantly  throughout  the  markets  of  the  world.  This  would 
compel  England  to  pay  double  for  the  silver  she  exchanges  for  wheat 
in  India,  and  so  she  would  pay  double  the  present  cost  of  wheat  at 
Livex'pool,  and  that  means  "  dollar  wheat "  in  our  country.  Wheat 
price  in  India  rests  on  price  of  silver.  Then  the  next  question 
ought  to  be,  "Will  not  the  value  of  the  dollar  in  our  country  by 
exjjansion  of  volume  be  on  a  grade  or  slide  downward  in  its  pur- 
chasing power?  "  And  I  answer  without  hesitation  that  it  will, 
for  dollars  have  valuation  only  in  exchange  for  products,  and  you 
can  not  measure  them  by  any  other  standard;  so  the  raising  of 
prices  means  the  falling  in  value  or  purchasing  power  of  the  dollar. 

Mr.  HAINER  of  Nebraska.  But  the  per  capita  circulation  in 
this  country  is  greater  than  the  per  capita  circulation  in  England. 

Mr.  COFFEEN  of  Wyoming.  Is  it  the  per  capita  question  you 
want  to  get  at,  or  the  difference  in  prices?  The  per  capita  circu- 
lation or  ratio  of  money  to  population  is  not  so  important  as  the 

1770 


19 

ratio  of  money  volume  to  volume  of  business  and  exchange,  and 
it  is  safe  also  to  say  that  90  per  cent  of  our  business  is  domestic, 
and  not  foi'eign. 

Mr.  HAINER  of  Nebraska.  I  am  speaking  now  of  the  circula- 
tion as  relating  to  the  price.  The  circulation  in  this  country  is 
greater  per  capita  than  in  England,  and  yet  the  pi-ice  of  wheat  is 
greater  in  England  than  it  is  in  the  United  States. 

Mr.  COFFEEN  of  Wyoming.  The  per  capita  may  be  more  or 
less,  but  the  increase  or  decrease  of  volume  in  relation  to  the 
amount  of  exchanges  or  business  is  the  question.  The  prices  can 
be  but  very  little  different  there  than  in  this  country,  just  enough 
to  encourage  export;  and  owing  to  our  surplus  wheat  the  prices 
in  this  country  are  affected  by  the  demand  at  Liverpool  to  some 
degree.  International  trade  is  carried  on  upon  the  basis  of  ex- 
changing goods  for  other  goods  without  much  regard  to  the  differ- 
ent systems  of  money  existing  or  difference  in  local  prices. 

Mr.  HAINER  of  Nebraska.  Do  you  dispute  the  fact  as  to  the 
price  in  England  being  greater  than  it  is  in  the  United  States? 

Mr.  COFFEEN  of  Wyoming.  No;  but  a  little  difference  in 
price  proves  nothing  in  this  case.  The  world's  international  trade 
is  carried  on  without  much  regard  to  the  different  systems  of 
money  in  which  prices  are  named  in  the  different  countries,  but 
always  vnth  due  regard  to  the  opportunities  of  getting  other  goods 
in  exchange  to  advantage. 

For  illustration,  suppose  by  doubling  the  volume  of  currency 
in  this  country  it  would  double  the  general  range  of  prices  in  this 
country,  as  I  hold,  and  as  is  clearly  taught  by  the  leading  authori- 
ties I  have  quoted,  will  that  affect  our  trade  with  Europe  seriously? 
Not  at  all. 

Trade  will  go  on  much  as  before,  for  if  the  importers  can  get  twice 
as  much  for  European  goods  in  our  higher  prices  they  can  take 
our  goods  also  at  prices  twice  as  high  as  before  in  exchange  and 
come  out  in  the  end  of  the  transaction  the  same  as  before.  They 
have  neither  gained  nor  lost  in  the  change  of  the  general  range  of 
prices  in  this  country.  Trade  goes  right  on,  and  our  goods  at 
higher  prices  will  exchange  for  their  goods  at  higher  prices  in  our 
own  currency  and  markets,  although  there  may  be  no  serious 
change  of  prices  in  Europe  on  either  the  exports  or  imports.  The 
demand  in  international  trade  is  not  for  money,  but  for  goods. 

Gold  exports  may  be  seriously  affected,  however,  but  if  so  it 
goes  as  bullion  or  merchandise  and  not  as  money.  Bills  of  ex- 
change will  take  care  of  themselves.  Yet  let  me  say  in  passing 
that  gold,  unless  there  be  for  other  reasons  an  unusual  demand 
for  it  elsewhere.  M-ill  not  go  out  of  this  country  imtil  its  place  is 
more  than  supplied  with  other  money,  for  there  can  be  no  rise  in 

1770 


20 

prices  here  until  more  money  is  added  in  some  way  than  is  sub- 
tracted by  export. 

The  very  principles  we  have  stated  require  that  prices  will  go 
do'wni  instead  of  up  if  more  money  is  exported  than  is  added  to 
to  our  volume. 

THE  CHANGE  OF  VOLUME  OF  MONET  IN  ITS  RATIO  TO  VOLUME  OF  BUSINESS. 

But  my  friend  from  Nebraska  must  remember  tliat  to  test  our 
proposition  we  must  start  with  the  already  adjusted  prices,  and 
we  will  find  that  every  great  increase  of  volume  in  any  country 
raises  the  prices  in  that  country.  Every  great  contraction  lowers 
prices.     All  history  and  experience  and  reason  teach  this  principle. 

When  nations  are  on  a  metallic  basis  of  money,  as  on  a  silver 
basis,  like  India  has  been  until  within  a  year  or  so  and  like  China 
has  been,  in  part  at  least,  silver  being  cheap  and  abundant  for 
them  to  use  as  money  and  add  to  their  volume,  prices  in  sUver  are 
maintained. 

This  has  been  precisely  the  effect  in  India  and  China.  There 
has  been  no  general  decline  of  i)rices  in  either  India  or  China  in 
their  silver  money.  Index  number  tables  on  leading  commodities 
will  show  this — while  in  our  country  demonetizing  silver  and 
pushing  by  contraction  toward  the  gold  standard  our  prices  on  all 
leading  products  have,  as  a  consequence,  fallen  about  50  per  cent. 

OUR  COMPETITION  WITH  INDIA  IN  EUROPEAN  MARKETS. 

But  my  friend  from  Nebraska  [Mr.  Hainer]  shall  have  a  little 
information  regarding  prices  of  a  few  articles  m  China  that  I  can 
give  him,  and  that  will  greatly  interest  his  people  in  central  Ne- 
braska. 

At  the  end  of  twenty  years  after  the  demonitization  of  silver  in 
our  country  and  Germany,  under  which  influence  silver  has  been 
rendered  more  abundant  for  China,  India,  and  others  of  the  Ori- 
ental countries,  while  gold,  by  the  greatly  increased  demand  for 
it,  has  almost  doubled  in  value  in  the  mad  scramble  for  a  gold 
standard  in  our  Occidental  countries,  we  find  wheat  43  per  cent 
higher  in  China  than  it  was  in  1873,  rice  19  per  cent  higher,  beans 
18  per  cent  higher,  in  their  silver  money.  (Appendix  to  Coinage 
Laws,  page  463.)  In  India,  wheat  was  18  per  cent  higher  in  Bom- 
bay and  3  per  cent  higher  in  Calcutta,  while  rice,  that  comes  in 
competition  with  one  of  our  Southern  products,  was  over  60  per 
cent  higher  in  these  places  at  the  close  of  1892  than  it  wasin  1873, 
when  we  demonetized  silver.     (Coinage  Laws,  page  789.) 

But  are  wheat  and  rice  and  other  food  products  that  we  produce 
higher  in  this  country  than  they  were  then?  In  other  words, 
while  their  prices  have  been  well  maintained  in  their  silver  cur- 
1770 


21 

Tency,  what  has  occurred  to  our  prices  in  our  foolish  and  criminal 
following  of  the  Anglo-American  gold  and  bond  conspiracy? 

Our  prices,  as  every  intelligent  citizen  in  Nebraska  and  through- 
out the  West  knows,  has  gradually  gone  the  other  direction  and 
is  still  going  down,  and  the  bottom  for  wheat  prices  resting  on 
the  ups  and  downs  of  money  in  circulation,  may  yet  go  to  20  cents 
per  bushel  in  Nebraska  if  the  money  power  can  sufficiently  con- 
trol and  contract  the  money  volume. 

WHO  GETS  THE  BENEFITS  OF  THIS  GOLD  STANDARD? 

"Who  gets  the  benefits  among  the  nations  we  have  mentioned  in 
the  attack  upon  and  demonetization  of  our  ovsm  silver? 

Every  nation  except  America.  We  get  the  losses,  while  Eng- 
land, using  gold,  and  India  and  China,  using  silver,  get  the  gains, 
and  the  mill  still  grinds  and  the  bank  and  bond  and  gold  advo- 
cates from  Washington  to  Wall  street  tell  us  that  we  must  hold 
on  to  the  gold  standard,  issue  bonds,  and  turn  over  the  issuance 
of  paper  money  to  the  tender  mercies  and  financial  erudition  of 
the  banks. 

How  does  it  work?  This  way.  An  importer  of  wheat  into  Eng- 
land can  say:  "Here,  I  will  give  you  Americans  65  cents  per 
ounce  for  your  demonetized  silver."  Before  we  demonetized  our 
silver  it  cost  him  §1.29  per  ounce.  He  takes  it  over  to  India,  where 
silver  has  been  the  standard  currency,  and  can  get  aboiit  as  much 
wheat  for  the  one  ounce  as  he  did  twenty  years  before,  although 
the  silver  to  buy  it  Avith  cost  him  only  half  as  much.  This  keeps 
up  prices  in  India  and  China  in  their  currencies,  but  cheapens  cost 
to  Europe,  and  our  wheat  sold  not  on  silver  but  on  gold  prices 
have  fallen  one-half,  and  our  exports  are  retarded  while  Oriental 
exports  have  been  greatly  encouraged.  Statistics  will  show  that  in 
wheat,  cotton,  and  some  other  articles  that  come  in  competition 
with  our  productions  the  exports  of  India  have  increased  during 
the  last  twenty  years  to  a  marvelous  extent. 

Etirope,  that  produces  no  silver,  and  the  Orient,  which  absorbs 
silver,  both  get  the  benefit,  while  our  country  loses  by  the  same 
operation,  by  reason  of  the  gold  standard  and  appreciated  dollars, 
about  $300,000,000  p'er  year  on  wheat  alone  and  from  one  to  two 
thotisand  millions  of  dollars  per  year  on  our  entire  production  of 
goods  and  grains  and  metals.  This  is  bank  and  gold-standard 
financiering.  Do  you  not  think  it  is  time  for  the  workers  of  this 
country  to  do  a  little  financiering  on  the  property  side  of  this  ques- 
tion, and  raise  prices  on  what  they  deal  in  by  the  restoration  of 
^ilver  to  our  people  by  free  coinage? 

You  say  this  an-III  cheapen  money. 

Yes.  to  raise  prices  is  to  cheapen  money  in  exchange  for  products, 
]',rii 


22 

ana  to  say  the  same  thing  in  another  way,  to  cheapen  money  by 
making  it  more  abundant  is  to  raise  the  general  range  of  prices. 

This  is  the  invariable  and  scientific  law  of  money  in  every  coun- 
try and  in  all  history.  No  competent  student  of  the  money  ques- 
tion, here  or  elsewhere,  \vill  denj"  this. 

Other  things  being  equal,  an  increasing  volume  of  the  money  in 
any  nation  in  proportion  to  the  trade  and  work  for  money  to  per- 
form will,  in  all  cases,  raise  prices. 

Then  let  us  reduce  the  dishonestly  high  and  scarce  money  of 
America  by  remonetizing  silver  or  issuing  legal-tender  Govern- 
ment notes,  or  both,  until  we  revive  prices,  profits,  and  industry 
and  secure  more  honest  dollars  in  relation  to  the  products,  prop- 
erty, and  debts  of  our  own  people. 

Finally,  I  will  say  that  prices  of  goods  in  China  or  England  or 
France  or  elsewhere  is  only  an  indication  of  the  ratio  between  the 
volume  of  money  and  the  mass  of  excheangeable  wealth  in  the  one 
country,  and  can  not  therefore  test  the  status  of  price  in  other 
countries. 

There  is  no  exact  ground  to  test  the  effect  of  per  capita  circula- 
tion and  prices  in  countries  widely  different  in  their  habits  of 
trade  and  quantity  of  business,  but  the  test  comes  by  noting 
change  of  prices  in  each  country  when  the  volume  is  changed  in 
that  country. 

There  is  according  to  estimates  of  a  reliable  authority  which  I 
have  recently  examined  (speech  of  Senator  John  P.  Jones  on  re- 
peal bill,  page  298,  in  pamphlet  form)  about  $98,000,000,000  worth 
of  production  and  commerce  in  the  United  States  annually.  This  is 
an  enonnous  amount  and  probably  six  to  ten  times  as  great  as  the 
production  and  trade  of  China.  I  have  no  means  of  knowing  pre- 
cisely as  to  this.  Now,  $3  per  capita,  which  my  friend  has  men- 
tioned as  the  circulation  in  China,  would  give  us  at  least  §800,000,000 
of  circulation  for  China,  which  is  very  close  to  one-half  of  our 
circulation,  although  the  total  of  her  trade  may  not  even  be  one- 
sixth  or  one-tenth  as  great  as  ours.  So  in  proportion  to  her  trade 
and  need  for  money  she  may  have  far  greater  circulation  than  our 
country. 

Now,  having  mentioned  the  question  of  export  of  gold  in  con- 
nection with  currency  and  prices,  I  desire  to  take  up  this  clamor 
about  raids  or  vv-ithdrawals  of  gold  from  the  gold  reserve  in  our 
Treasury. 

WHO  IS  RESPONSIBLE  FOR  CONTINUANCE  OF  THE  RAID. 

I  am  convinced  that  the  raids  on  the  gold  reserve  are  continued 
only  by  the  option  and  consent  of  the  Administration  and  these 
are  my  reasons: 

1770 


23 

1.  Greenbacks  and  Treasury  notes,  of  which  there  are  nearly 
$500,000,000  in  existence,  are  used  by  the  raiders  to  take  the  gold 
out  of  the  Treasury. 

2.  These  are  all  payable  in  silver  as  well  as  gold;  are  all  payable 
in  coin.  All  obligations  of  the  Government  are  coin  or  bimetallic 
obligations,  practicly,  except  gold  certificates. 

3.  There  is  abundance  of  silver  in  the  Treasury  that  ought  to  be 
paid  on  these  bimetallic  or  coin  obligations,  and  if  not  a  sufficiency 
coined  to  pay  all  coin  oblgations  that  may  be  presented  the  Sec- 
retary of  the  Treasury  can,  under  the  laws  existing,  coin  more  at 
his  discretion. 

4.  The  announcement  by  the  Secretary  that  he  should  from  this 
hour  forward  use  the  right  and  option  of  the  GoTernment  of  pay- 
ing all  coin  obligations  in  silver  coin  at  any  time  when  the  amount 
of  the  gold  reserve  in  the  Treasiiry  was  below,  say  $100,000,000, 
would  instantly  stop  the  presentation  of  any  excessive  amount  of 
such  coin  obligations  and  protect  the  gold  reserve. 

The  honorable  Secretary  of  the  Treasury  is  not  using  the  legal 
right  and  option  of  paying  coin  obligations  favorably  to  the  Gov- 
ernment and  in  the  interest  of  preserving  the  gold  reserve  in  the 
Treasury  when  he  fails  or  refuses  to  pay  out  silver  while  it  is  more 
abundant  than  gold  in  the  Treasury. 

The  option  of  payment  is  always  and  wholly  the  right  of  the 
debtor — the  one  who  pays — and  by  no  fair  construction  can  be- 
come the  option  of  the  debtor. 

■France  and  other  nations,  with  their  more  or  less  complete  con- 
trol of  the  central  bank,  exercise  their  option  for  the  side  of  the 
Government,  and  not  for  the  disadvantage  of  Government,  when 
given  by  law  or  contract  to  the  Government  as  debtor. 

Our  own  Treasury  is  the  only  place  among  he  civilized  nations 
of  the  earth  where  the  legal  right  and  option  is  not  used  favorably 
to  the  Government.  But  here  the  gold  speculators  of  the  world 
may  raid  freely  for  gold  with  bimetallic  or  coin  obligations. 

The  last  paragraph  of  section  2  of  the  Sherman  silver-purchase 
law  of  1800,  in  declaring  for  a  policy  to  maintain  silver  and  gold 
metals  at  a  parity,  does  not  destroy  the  right  or  option  of  the  Gov- 
ernment to  pay  the  coin  of  either  metal  on  all  coin  obligations. 

THE  STANLEY  MATTHEWS  RESOLUTION. 

The  Stanley  Matthews  resolution,  carried  by  a  strong  majority 
in  both  Houses  of  Congress  early  in  1878,  is  still  in  force,  as  declar- 
ing the  intent  of  Congress,  and  ought  to  be  obeyed. 

Let  the  Secretary  do  his  plain  duty  and  exercise  for  us  our  legal 
and  reserved  right  and  option  to  pay  in  silver  and  the  raid  on  the 
gold  reserve  is  ended. 
1770 


24 

I  will  quote  the  resolution  from  the  speech  of  Senator  Jones, 
together  with  the  comments  that  he  made  thereon  during  the 
debate  on  the  repeal  bill: 

Whereas  by  an  act  entitled  "An  act  to  strengthen  the  public  credit," 
approved  March  18, 1869,  it  was  provided  and  declared  that  the  faith  of  the 
United  States  was  thereby  solemnly  pledged  to  the'payment  in  coin  or  ita 
equivalent  of  all  the  interest  bearing  obligations  of  the  United  States,  except 
in  cases  where  the  law  authorizes  the  isgue  of  such  obligations  had  previously 
provided  that  the  same  might  be  paid  in  lawful  money  or  other  currency  than 
gold  or  silver;  and 

Whereas  all  the  bonds  of  the  United  States  authorized  to  be  issued  by  the 
act  entitled  "An  act  to  authorize  the  refunding  of  the  national  debt," 
approved  July  14, 1870,  by  the  terms  of  said  act  were  declared  to  be  redeem- 
able in  coin  of  the  then  present  standard  value,  bearing  interest  payable 
semiannually  in  such  coin;  and 

Whereas  all  bonds  of  the  United  States  authorized  to  be  issued  i;nder  an 
act  entitled  "An  act  to  provide  for  the  resumption  of  specie  payments,"  ajH 
proved  January  14, 1875,  are  required  to  be  of  the  description  of  bonds  of  the 
United  States  described  in  the  said  act  of  Congress  approved  July  14, 1870, 
entitled  an  "Act  to  authorize  the  refunding  of  the  national  debt; "  and 

Whereas  at  the  date  of  the  passage  of  the  said  act  of  Congress  last  afore- 
said, to  wit,  the  14th  day  of  July,  1870,  the  coin  of  the  United  States  of  stand- 
ard value  of  that  date  included  silver  dollars  of  the  weight  of  413^  grains 
each,  declared  by  the  act  approved  January  18, 1837,  entitled  "An  act  supple- 
mentary to  the  act  entitled  'An  act  establishing  a  mint  and  regulating  the 
coins  of  the  United  States,' "  to  be  legal  tender  of  payment,  according  to  their 
nominal  value  for  any  sums  whatever:  Therefore, 

Be  it  resolved  by  the  Senate  (the  House  of  Representatives  concurring  therein). 
That  all  the  bonds  of  the  United  States  issued  or  authorized  to  be  issued 
under  the  said  acts  of  Congress  hereinbefore  recited  are  payable,  principal 
and  interest,  at  the  option  of  the  Government  of  the  United  States,  in  silver 
dollars  of  the  coinage  of  the  United  States,  containing  412j  grains  each  of 
standard  sUver,  and  that  to  restore  to  its  coinage  such  silver  coins  as  a  legal 
tender  in  payment  of  said  bonds,  principal  and  interest,  is  not  in  violation 
of  the  public  faith  nor  in  derogation  of  the  rights  of  the  public  creditor. 

The  able  Senator  then  proceeds  to  comment  on  these  resolutions 
as  follows: 

A  motion  to  refer  that  resolution  to  the  Committee  on  Finance  of  the  Sen- 
ate was  voted  down.  A  very  influential  member  of  the  Senate,  the  then  Sen 
ator  from  Vermont,  Mr.  Edmunds,  moved  to  strike  out  such  phraseology  of 
the  resolution  as  declared  silver  to  be  legal  tender  in  payment  of  the  bonds 
and  to  insert  instead  phraseology  which  would  make  the  bonds  "  payable  in 
gold  or  its  equivalent."  But.  not  satisfied  with  these  words,  the  distinguished 
Senator  from  Vermont  in  addition  moved  to  incorporate  in  the  resolution  the 
following  declaration; 

"And  that  any  other  payment — " 

That  is  to  say,  any  other  than  "  gold  or  its  equivalent " — 
"without  the  consent  of  the  creditor  would  be  in  violation  of  the  public  faith 
and  in  derogation  of  his  rights." 

This  propo.sed  amenament  brought  sharply  before  the  attention  of  the  Sen- 
ate the  very  point  in  issue.  What  was  the  decision  of  the  Senate  upon  that 
point? 

The  amendment  of  the  Senator  from  Vermont  was  voted  down;  the  vote 
standing— yeas  18,  nays  48.    This  means  that  nine  years  after  the  passage  of 
1770 


25 

the  act  to  strengthen  the  public  credit  which  guaranteed  to  the  creditors 
payment  of  the  principal  and  interest  of  their  bonds  in  coin,  and  seven  and 
one-half  years  after  the  standard  of  the  coin  was  named  48  out  of  66  Senators 
of  the  United  States  repelled  the  assertion  or  implication  that  the  bonds 
were  payable  in  gold  alone. 

This  resolution  passed  the  Senate  on  January  16, 1878,  by  a  vote 
of  43  yeas  to  22  nays,  and  passed  the  House  on  the  29th  of  same  month 
by  189  yeas  to  only  79  nays,  and  this  ought  to  be  a  sufficient  guide 
as  to  the  intent  of  Congress  regarding  the  payment  of  the  public 
debt,  including  even  the  refunded  bonds,  and  it  repels  the  assump- 
tions of  the  money  power  that  coin  obligations  must  be  paid  in 
gold  alone. 

It  is  strange  how  pure  and  refined  some  men  on  this  floor  have 
become  when  they,  in  the  face  of  such  strong  declarations  and  in 
the  face  of  the  plain  i)ro visions  for  coin  payment  recited  in  the 
acts  of  Congress  on  which  the  bonds  have  all  been  issued,  even 
these  last  ones  of  doubtful  authorization,  for  which  the  specie-re- 
sumption law  of  1875  is  quoted  as  sufficient  warrant,  and  know- 
ing how  closely  bondholders  scrutinize  the  terms  of  payment— I 
say  it  is  strange  that  men  here  or  anywhere  will  claim  that  the 
Treasury  gold  must  be  kept  open  to  the  raid  for  it  on  all  kinds  of 
coin  obligations,  while  the  reserved  right  and  option  of  our  people 
to  pay  in  silver  coin  as  their  interests  may  require  is  so  completely 
retained  although  ignored  by  our  administrations. 

DID  SILVER  COINAGE  UNDER  THE  BLAND  ACT  DRIVE  OUT  GOLD? 

On  February  28,  1878,  the  so-called  Bland  Act,  providing  for  the 
coinage  of  not  less  than  $2,000,000  per  month  of  silver  dollars,  also 
restored  their  full  legal  tender  without  limit. 

The  Wall  street  press  raised  a  howl,  as  usual,  and  started  to 
scatter  throughout  the  country  their  usual  false  prophecies  of 
panics  and  danger  which  failed  to  materialize  for  the  occasion. 

About  three  weeks  after  the  passage  of  the  Bland  law  of  1878, 
a  conference  regarding  silver  and  the  resumption  of  specie  pay- 
ments with  the  now  Senator  John  Sherman,  of  demonetization 
fame,  who  was  then  Secretary  of  the  Treasury  under  President 
Hayes,  was  held  by  the  Senate  Finance  Committee. 

The  Secretary,  Mr.  Sherman,  for  the  time,  gave  evidence  bear- 
ing on  silver  that  will  prove  how  surely  silver  was  held  to  be  the 
proper  payment  on  all  coin  obligations  of  the  Government.  The 
chairman  of  the  committee  asked  Mr.  Sherman,  "  "What  effect  has 
the  silver  bill  had,  or  is  likely  to  have,  upon  the  resumption  of 
specie  payments?" 

Remember  that  the  Bland  law  was  now  in  operation. 

After  saying  ' '  I  shall  have  to  confess  that  I  have  been  mistaken 
myself,"  and  after  stating  some  adverse  effects  that  he  believed 
the  new  law  would  have,  he  goes  on  to  state  the  advantages. 
1770 


26 

JOHN  SHERMAN'S  TESTIMONY  AS  SECRETARY  OF  THE  TREASURY. 

On  the  other  hand  I  will  give  the  favorable  effects.  In  the  first  place,  the 
silver  bill  satisfied  a  strong  public  demand  for  bimetallic  money,  and  that 
demand  is,  no  doubt,  largely  sectional.  No  doubt  there  is  a  difference  of 
opinion  between  the  West  and  South  and  the  East  on  this  subject,  but  the 
desire  for  remonetization  of  silver  was  almost  universal.  In  a  government 
like  ours  it  is  always  good  to  obey  the  popular  current,  and  that  has  been 
done,  I  think,  by  the  passage  of  the  silver  bill.  Resumption  can  be  maintained 
more  easily  upon  a  double  standard  than  upon  a  single  standard.  The  bulky 
character  of  silver  ivould  prevent  payments  in  it,  while  gold,  being  more  portable, 
would  be  more  freely  demanded,  and  I  think  resumption  can  be  maintained 
with  a  less  amount  of  silver  than  of  gold  alone. 

Senator  Bayard.  You  are  speaking  of  resumption  upon  the  basis  of  silver, 
or  of  silver  and  gold? 

Secretary  Sherman.  Yes,  sir;  I  think  it  can  be  maintained  better  upon  a 
bimetallic,  or  alternative  standard,  than  upon  a  single  one,  and  with  less  ac- 
cumulation of  gold.  In  this  way  remonetization  of  silver  would  rather  aid 
resumption.  The  bonds  that  have  been  returned  from  Enrope  have  been 
readily  absorbed— remarkably  so.  The  recent  returns  in  New  York  show  the 
amount  of  bonds  absorbed  in  this  country  is  at  least  a  million  and  a  quarter  a 
day.  We  have  sold  scarcely  any  from  the  Treasury  since  that  time.  This 
shows  the  confidence  of  the  people  in  our  securities,  and  their  rapid  absorp- 
tion will  tend  to  check  the  European  scare. 

Senator  Voorhees.  That  shoivs,  Mr.  Secretary,  that  this  cry  of  alarm  in  New 
York  ivas  unfounded.  Then  this  capital  seeks  our  bonds  wlien  this  bitnetallic 
basis  is  declared  f 

Secretary  Sherman.  Yes;  many  circumstances  favor  this.  Thedemandfor 
bonds  extends  to  the  West  and  to  the  banks. 

Senator  Jones.  Then,  in  its  effect  upon  the  return  of  the  vast  amount  of 
bonds  you  refer  to,  would  there  not  be  an  element  of  strength  added  in  favor 
of  resumption,  in  that  the  interest  on  these  bonds  returned  would  not  be  a 
constant  drain  upon  the  country? 

Secretary  Sherman.  Undoubtedly. 

Senator  Jones.  Would  the  fact  that  they  come  back  enable  us  to  maintain 
resumption  much  easier? 

Secretary  Sherman.  Undoubtedly. 

Senator  Bayard.  You  speak  of  resumption  upon  a  bimetallic  basis  being 
easier.  Do  you  make  that  proposition  irrespective  of  the  readjustment  of 
the  relative  values  of  the  two  metals  as  we  have  declared  them? 

Secretary  Sherman.  I  think  so.  Our  mere  right  to  pay  in  silver  would 
deter  a  great  many  people  from  presenting  notes  for  redemption  who  would 
readily  do  so  if  they  could  get  the  lighter  and  more  portable  coin  in  ex- 
change. Besides,  gold  coin  can  be  exported,  while  silver  coin  could  not  be  ex- 
ported, because  its  market  value  is  less  than  its  coin  value. 

Senator  Bayard.  I  understand  that  it  works  practically  very  well.  So  long 
as  the  silver  is  less  in  value  than  the  paper  you  will  have  no  trouble  in  re- 
deeming your  paper.  When  a  paper  dollar  is  worth  98  cents  nobody  is  going 
to  take  it  to  the  Treasury  and  get  92  cents  in  silver;  but  what  are  you  to  do 
as  your  silver  coin  is  minted?  By  the  1st  of  July  next  or  the  1st  of  January 
next  you  have  eighteen  or  twenty  millions  of  silver  dollars  which  are  in  cir- 
culation and  payable  for  duties,  and  how  long  do  you  suppose  this  short  sup- 
ply of  silver  and  your  control  of  it  by  your  coinage  will  keep  it  equivalent  to 
gold — when  one  is  worth  10  cents  less  than  the  other? 

Secretary  Sherman.  Just  so  long  as  it  can  be  used  for  anything  that  gold  is 
used  for.    It  will  be  worth  in  this  country  the  par  of  gold  until  it  becomes  so 
abundant  and  bulky  that  people  will  become  tired  of  carrying  it  about;  but  in 
our  country  that  can  be  avoided  by  depositing  it  for  coin  certificates. 
1770 


27  , 

Biit  possibly  one  may  say  that  the  recent  Treasury  notes  of  1890 
were  issued  under  a  law  pledging  parity.  Yes,  possibly,  but  not 
such  a  parity  as  keeping  silver  in  subordination  to  gold.  That  is 
not  parity,  but  imparity,  as  we  may  say ,  or  inequality. 

Besides,  as  we  have  at  another  time  stated,  this  incidental  in- 
jection or  stump-speech  clause  about  parity  that  has  become  the 
scapegoat  on  whose  head  were  laid  the  crimes  of  Wall  street  and 
her  allies — laid  by  the  high  priesthood  of  the  Aaronical  golden- 
calf  worshipers  can  not  blot  out  or  override  the  express  state- 
ment of  the  act  in  the  mandatory  part  of  the  same  law  that  these 
Treasury  notes  should  be  redeemed  "in  coin." 

Section  2  of  the  law  of  July  14,  1890,  is  plain  enough  on  this 
point,  but  section  3  provides  that  there  shall  be  coined  of  silver, 
"under  the  provisions  of  this  act,  as  much  as  may  be  necessary 
to  provide  for  the  redemption  of  the  Treasury  notes  herein  pro- 
vided for." 

Where  is  the  stump-speech,  double-construction,  parity-policy 
clause  against  such  positive  specific  provisions  to  redeem  in  silver 
coin  as  well  as  gold? 

Notwithstanding  the  intent  and  plain  provisions  of  the  law,  from 
tables  I  shall  give  you  a  little  later  in  my  remarks  you  will  find  that 
while  the  scheme  of  the  money  power  was  on  hand  to  drive  Congress 
to  repeal  the  silver  part  of  that  law.  Secretary  Foster,  and  the  pres- 
ent Secretary  following  in  the  same  line,  made  heavy  payments  in 
gold,  instead  of  silver,  as  the  interest  of  the  Government  demanded, 
in  redemptionof  these  same  silver-purchase  Treasury  notes — rang- 
ing from  one  to  eight  million  dollars  in  gold  per  month  for  the 
raiders. 

Referring  to  this  parity  scapegoat  clause,  as  I  have  termed  it, 
I  will  call  attention  to  the  reply  of  Senator  Jones  of  Nevada  to  Sen- 
ator "Wlas  in  his  speech  on  the  repeal  bill: 

Mr.  Vilas.  I  do  not  suppose  that  the  Senator  can  make  the  answer  he  is 
making  now  without  knowing  that  the  reason  why  the  silver  dollars  have 
been  held  at  par  is  because  the  Government  has  done  it  by  force  of  its  pledge 
of  parity,  and  by  the  practice  of  the  Treasury  in  maintaining  it. 

Mr.  Jones  of  Nevada.  I  can  say  to  the  Senator  that  I  was  on  the  conference 
committee  which  made  what  he  calls  a  "pledge  of  parity,"  and  there  was  no 
"pledge  of  parity"  given.  There  is  not,  in  my  judgment,  a  lawyer  in  this 
body  who  will  tell  me  that  under  any  rule  for  the  interpretation  of  statutes 
a  stray  expression,  such  as  the  Senator  calls  a  "  pledge  of  parity,"  without 
any  provision  for  its  enforcement,  is  more  binding  than  a  provision  distinctly 
and  expressly  mandatory,  specifying  with  precision  what,  under  certain  cir- 
cumstances, the  executive  officers  should  do. 

There  was  never  any  promise  made  that  the  silver  dollars  should  be  ex- 
changed for  gold.  And,  as  every  man  knows,  during  the  very  period  in  which 
the  gold-standard  press  was  stating  that  the  people  of  this  country  feared 
the  silver  dollars  would  go  to  a  discount  those  very  dollars  were  going  to  a 
premium  over  gold.  There  was  never  a  more  impertinent  declaration  put 
1770 


28 

before  a  people  than  that  the  recent  panic  was  occasioned  by  any  fear  on  the 
part  of  the  people  of  this  country  that  their  silver  money  might  not  retain 
all  its  value.  What  better  proof  can  be  cited  of  this  than  that  silver  dollars 
went  to  a  premium  of  3  per  cent  over  gold? 

During  all  the  period  of  the  panic  I  never  heard  of  a  man  taking  any  por- 
tion of  the  money  of  the  United  States,  whether  a  silver  dollar,  a  greenback 
dollar,  a  Treasury  note,  or  note  of  any  other  kind,  to  the  Treasury  to  be  ex- 
changed for  gold.  In  all  the  "  runs  "  that  were  made  upon  the  banks  and  all 
the  money  that  was  taken  out  of  the  Treasury  no  effort  was  made  by  our  peo- 
ple to  get  gold.  The  fear  entertained  by  the  people  was  not  of  the  kind  of 
money  in  which  they  would  be  paid.  What  they  feared— and  subsequent 
events  proved  their  fears  to  be  well  founded— was  that  the  banks  did  not  have 
any  form  of  money  in  which  to  pay. 

BETiniNO  GREENBACKS  TO  SECURE  THE  ISSUE  OF  BONDS. 

Just  at  present  the  money  powers  are  trying  to  secure  the  de- 
struction of  the  United  States  notes  or  gi-eenbacks  and  secure  the 
issuance  of  bonds  instead,  and  the  advocates  of  the  pending  bUl 
are  seeking  to  turn  over  the  issuance  of  all  paper  currency  to  both 
State  and  Federal  banks. 

So  now  the  raid  is  by  use  of  greenbacks  instead  of  Treasury 
notes,  and  this  will  answer  for  them  the  double  purpose  of  dis- 
crediting the  greenback  and  preparing  an  excuse  for  the  Secretary 
to  sell  more  bonds  to  the  raiders  to  get  the  looted  gold  back  again. 

It  has  been  shown  many  times  that  the  teaching  and  prophecy 
of  our  Wall  street  financiers  are  nearly  always  wrong  whenever 
they  put  forward  their  efforts  to  influence  financial  legislation. 

Under  the  plea  of  standing  for  ' '  honest  money ''  they  have  stood 
for  an  appreciating  money  by  contraction  and  demonetization  until 
they  have  broken  down  prices,  ruined  the  investors  in  property 
and  productive  enterprises,  and  have  given  us  the  most  dishonest 
money  the  world  has  ever  seen. 

Under  the  plea  of  desiring  to  maintain  silver  at  a  "parity"  with 
gold  they  have  done  everything  in  their  power  to  prevent  the  pos- 
sibility of  i^arity,  closing  the  mints  and  keeping  sUver  out  f>f  use 
as  far  as  possible,  and  then  pretending  they  do  not  know  why 
price  of  silver  bullion  has  gone  down. 

They  talk  against  the  greenbacks  and  legal-tender  notes  of  the 
Government  as  being  "founded on  nothing," meaning  on  Grovem- 
ment  credit,  and  yet  make  their  own  notes  redeemable  in  green- 
backs and  founded  on  Government  bonds,  both  of  which  rest 
purely  on  Government  credit. 

They  assured  us  of  "relief  from  the  financial  stringency"  and 
the  raiders  on  the  gold  reserves  if  the  purchasing  clause  of  the 
Shei-man  law  of  1890  was  repealed. 

By  these  assurances  and  various  other  means  the  law  was  re- 
pealed November  1,  1893. 

Instead  of  relief  and  prosperity  following,  the  lowest  prices 
1770 


29 


ever  known  have  overtaken  all  products,  and  as  to  the  raiding  of 
the  gold  reserve  by  j)resentation  of  greenbacks,  it  has  suffered 
greater  depletion  during  this  last  year,  1894,  than  in  all  the  fifteen 
years  preceding. 

DID  REPEAL  OF  THE  PURCHASE  CLAUSE    OP  THE  SHERMAN    LAW  STOP  THB 
GOLD  RAID? 

That  none  may  question  the  statistics  I  have  given  on  the  gold 
redemption  of  the  United  States  notes  since  1879  in  comparison 
with  the  raids  of  the  last  year,  I  will  insert  the  following  tables 
and  a  brief  letter  from  the  honorable  Treasurer  of  the  United 
States,  bringing  the  computations  by  months  down  to  the  begin- 
ning of  tnis  month,  and  from  current  reports  the  raid  on  our  gold 
this  month  still  continues: 

Treasury  Department,  Office  of  the  Treasurer, 

Washington^  D.  C,  January  10, 1895. 
Hon.  H.  A.  Coffeen,  House  of  Representatives: 

Sir:  In  compliance  with  the  request  made  in  your  memorandum  of  this 
date,  I  have  the  honor  to  say  that  the  redemptions  of  United  States  notes  and 
Treasury  notes  in  gold  diiring  the  months  of  October,  November,  and  De- 
cember, 1894,  were  as  follows: 


Month. 


United  Treasury 

States  notes.        notes. 


Total. 


October 

November . 
December  . 

Total. 


$2,543,719 

7,OS5,]:i:3 

30, 819, 622 


$505,171 

714,614 

1,086,416 


$3,047,890 

7, 799, 747 

31,906,038 


40,447,474 


2,306,201 


42,753,675 


I  inclose  herewith  a  statement  showing  the  redemptions,  by  calendar  years, 
since  January  1,  1879. 

Respectfully,  yours,  D.  N.  MORGAN. 

Treasurer  United  States. 
United  States  notes  and  Treasury  notes  redeemed  in  gold,  by  calendar  years. 


Year. 

United 
States  notes. 

Treasury 
notes. 

Total. 

1879  

$11, 456,  .5.36 

54:5.  H(X) 

28.7.50 

115,:X;0 

$11, 456,  .536 

1880                                                     

54.3,800 

1881      

28,750 

1883                                                     

115,000 

1883 

1884                                                         

810,000 

2,927,400 

9,;349,,507 

1,3:39,945 

475, 181 

9.59,  r)48 

;«t,  273 

9,016,727 

15,96:1813 

44,49:5,512 

123,941,059 

810,000 

1885 

2,927,400 

1886                                                        

9,:549,.507 

1887 

1,3:59,945 

1888                                                      

475,181 

1889 

$686^870" 

20, 296, 747 
32,062.778 
17,802,944 

9.59,  .548 

1890 

:«9. 273 

1891 

9,7>):5,.597 

1892            .                                     - 

■3»>,;.'ta),,560 

1893 

76,  'hV>,  290 

1894.. 

141,7-44,003 

Total      - 

221,760,051 

70,849,339 

293,609,390 

Office  of  the  Treasurer  United  States, 

January  S,  1895. 


30 

Remember  that  the  gross  exports  of  gold  give  no  indication  of 
the  net  exports. 

Mnch  of  the  gold  that  was  drawn  on  Treasury  notes  and  others 
while  the  scare  was  being  worked  up  against  Treasury  notes  and 
to  secure  the  repeal  of  the  silver-purchase  clause  was  shipped 
back  again  from  Europe  in  the  same  kegs  that  contained  the  gold 
when  exported. 

Now,  having  stopped  the  issue  of  legal-tender  Treasury  notes, 
the  scare  and  clamor  is  worked  up  against  the  United  States  notes, 
or  greenbacks:  so  they  are  being  used,  as  you  see  from  the  tables, 
instead  of  the  Treasury  notes  of  1890. 

Will  the  people  be  caught  again  by  the  tricks  of  the  bank  and 
bond  and  gold  consi)iracy  and  allow  the  complete  destruction  of 
their  legal-tender  greenbacks  and  the  issuance  of  interest-bearing 
gold  bonds — not  coin  but  gold  bonds — instead? 

Not  by  my  vote  shall  the  conspiracy  ^^'in  as  long  as  I  shall  rep- 
resent the  interests  of  Wyoiuing  on  this  floor.  Let  us  stand  by 
the  gi-eenbacks  and  silver  as  a  permanent  part  of  our  currency. 

HOAV  THK  BANKS  SAVE  THE  COUNTRY. 

The  redemption  of  greenbacks  in  gold  began  January  1,  1879, 
under  the  law  known  as  the  specie  resumption  act.  and  from 
that  time  to  January  1, 1894,  a  period  of  fifteen  years,  the  amount 
of  gold  paid  out  on  United  States  notes,  or  greenbacks  as  com- 
monly called,  w^as  less  than  $98,000,000  for  the  entire  period,  being 
an  average  of  less  than  $7,000,000  ($6,521,266)  per  year. 

This  brings  us  to  the  year  1894,  just  closed,  the  first  calendar 
year  since  the  repeal  of  the  silver-purchase  clause,  pushed  through 
Congress  by  the  gold  and  bank  power  to  "  save  the  country  and 
stop  the  raids  on  the  Treasurj- gold."  Did  this  stop  it?  Did  it 
even  reduce  the  payment  of  gold  on  greenbacks  below  the  average 
of  $(),o21,26C  per  year? 

Oh,  no;  here,  as  in  nearly  all  other  claims  and  prophecies,  they 
have  again  failed. 

The  payment  of  gold  to  the  raiders  in  1894  under  this  repeal 
measixre.  entirely  cutting  off  the  coinage  of  silver,  has  been  over 
§123,000,000 — a  sum  far  greater  than  all  paid  ovit  during  the  fifteen 
years  proceeding,  including  silver  coinage  under  the  Bland  Act 
for  over  eleven  years  and  the  purchase  of  silver  for  the  remain- 
der of  the  period  up  to  the  time  of  the  "  gi-eat  unconditional." 

It  would  at  the  preceding  average  rate  take  over  nineteen  years 
to  deplete  the  Treasury  of  as  much  gold  as  has  been  looted  from 
the  Treasury  by  the  gold  and  bank  combine  within  the  last  twelve 
months  on  greenbacks  alone,  leaving  out  of  the  account  the  ma- 
nipulation of  Treasury  notes  also.  And  during  this  last  month  of 
1770 


31 

December  nearly  one-tlaird  as  niucli  gold  has  been  taken  out  by  these 
vicious  processes  of  the  false  jirophets  as  in  fifteen  years  before. 

WHY  ARE  THE   PEOPI^E  NOT  PROTECTED  AT  THE  TREASURY? 

Who  can  rely  upon  such  sources  of  teaching?  Why  should  Con- 
gress longer  listen  to  them?  On  what  important  financial  proposi- 
tion have  they  ever  taken  position  since  the  gold  conspiracy  began 
but  what  has  been  directly  or  indirectlj'  dangerous  and  detrimental 
to  the  people,  who  ought  to  have  a  circulation  of  currency  inde- 
pendent of  bank  manipulation  and  who  ought  to  have  a  Govern- 
ment and  a  Congress  that  would  give  the  people  such  a  currency? 

Why  is  it  not  done? 

Why  are  the  xseople  not  protected? 

Because  the  people  have  too  long  been  following  the  false  teach- 
ing and  the  false  prophecy  of  the  money  power. 

And  because,  too,  I  fear,  that  we  have  not  had  an  Administra- 
tion and  Secretary  of  the  Treasury  since  the  days  of  Lincoln  and 
Johnson  biit  what  has  allowed  the  money  power  the  benefit  of 
every  possible  construction,  and  sometimes  bold  misconstruction, 
of  the  laws,  and  as  far  as  i^ossible  cut  off  the  people  from  their 
highest  and  best  legal  rights  and  options  to  pay  all  coin  obliga- 
tions in  silver  as  well  as  other  lawful  money  for  payment. 

To-day,  m  one  hour  of  bold,  patriotic  action,  the  raid  on  gold 
woiild  be  stopped  forever  if  our  Administration  and  the  Secretary 
would  pay  out  silver  in  all  coin  redemptions  properly. 

I  know  not  what  others  may  think  of  the  actions  of  some  of  our 
highest  officials  during  this  twenty-five  years'  struggle  with  the 
money  power,  but  as  for  me,  "  I  would  rather  be  a  dog  and  bay 
the  moon  than  such  a  Roman." 

LET  CONGRESS  RESIST  EXECUTIVE  INTERFERENCE  ON  LEGISLATIVE  MATTERS. 

I  can  not  attack  motives.  I  must,  however,  be  allowed  to  attack 
ignorance  and  error  in  method. 

I  must  be  permitted  to  appeal  to  this  House — a  parliament  than 
which  none  should  be  found  on  the  face  of  the  earth  more  honor- 
able and  intelligent  and  triie  to  the  people — so  if  possible  to 
arouse  them  to  break  loose  and  throw  off  the  hypnotic  spell  that 
the  glare  of  wealth  and  power  has  thrown  over  this  legislative 
body. 

In  our  sphere  as  Representatives  in  the  legislative  branch  of 
this  Grovernment  there  is  no  power  greater  than  ours. 

Our  commissions  are  from  the  highest  sources— the  sovereign 
people  themselves. 

We  do  not  derive  our  authority  on  legislative  questions  from 
the  Chief  Executive,  and  we  ought  to  withstand  encroachments 
upon  our  prerogatives  from  that  source  as  we  would  those  of  the 
1770 


32 

most  insidious  enemy  that  could  undertake  the  subversion  or  sub- 
jugation of  our  country. 

We  miist  prove  ourselves  men  and  patriots  and  true  to  the  trust 
the  people  have  placed  in  our  hands. 

Is  this  a  hard  thing  to  do? 

From  what  I  have  witnessed  in  the  brief  period  I  have  been 
trjang  to  serve  as  Representative  on  this  floor,  I  must  conclude 
that  it  is  exceedingly  diihcult  for  many,  but  I  also  must  conclude 
that  it  arises  from  either  ignorance  or  cowardice. 

No  others  will  surrender  to  this  money  power  in  this  great 
crisis.    Stand,  then,  for  your  people  and  the  right.     (Applause). 

WHO    CONTllOLS    THE    VOLUME    OF     MONEY    CONTROLS    THE    WEALTH    OP    A 

COUNTRY. 

The  Government  alone  can  be  trusted  with  control  of  the  money 
volume,  and  the  Constitution  makes  it  the  explicit  duty  of  Con- 
gress to  regulate  the  value  of  money,  which  can  not  be  done  other- 
wise than  by  regulating  the  volume  of  dollars  in  circulation. 
Well,  you  say,  what  shall  that  volume  be?  I  will  answer,  first,  in 
coin,  in  gold,  for  those  who  prefer  it  in  circulation;  second,  in  sil- 
ver, freely  coined,  for  those  who  prefer  silver,  and  I  would  have  it 
coined  at  the  old  ratios  of  16  to  1 ;  and  thirdly,  paper  money.  Treas- 
ury notes  of  full  legal  tender,  shall  be  supi)lementary  to  the  coin, 
and  issued  in  volume  suiiicient  to  answer  the  demands  of  business 
and  suffieient  to  bring  prices  up  to  an  equitable  basis  with  the 
prices  existing  when  the  greater  debts  of  our  people  were  contracted. 

Contracting  the  volume  of  money,  which  process  by  the  unerring 
law  of  monetary  science  results  in  contracting  and  lowering  prices 
of  aU  products  and  property,  while  debts  are  pending  is  robbery 
of  debtors,  and  our  nation  should  guard  our  people  against  such 
robbery  as  faithfully  as  they  would  guard  us  against  the  invasions 
of  a  foreign  foe, 

HOW  TO  DETERMINE  THE  PROPER  VOLUME. 

Now,  I  will  take  up  the  question,  What  will  answer  the  de- 
mands of  business,  and  what  will  answer  the  demands  of  equity? 
While  on  the  one  hand  there  is  an  unlimited  demand  for  money, 
since  money  will  exchange  for  or  buy  all  things  offered  to  supply 
man's  necessities,  on  the  other  hand  the  demands  of  equity  must 
be  considered  and  the  supply  or  volume  be  limited.  I  will  answer 
the  question.  What,  then,  shall  the  quantity  or  volume  be?  in  this 
way.  Our  business,  our  prices,  our  enterprise,  our  industries  are 
prostrated  to-day  l)y  panic  and  contraction.  These  are  financial 
troubles,  not  tariff  troubles.  We  have  heard,  perhaps,  too  much 
from  some  quarters  on  this  floor  in  the  attempts  to  throw  the 
blame  for  the  depression  of  prices  upon  tariff  legislation.     The 

1770 


33 

question  of  prices  is  a  financial  question,  not  a  question  of  exports 
and  imports.  It  is  a  question  of  money.  It  is  a  question  chiefly 
of  local  concern.  You  can  not  understand  money  without  under- 
standing its  effect  on  prices,  because  money  by  its  volume  con- 
trols jjrices,  and  there  is  no  other  way  to  maintain  prices  properly. 

Now,  a  word  or  two  further.  If,  then,  we  acknowledge,  as  we 
should  and  do,  and  as  all  civilized  nations  practically  do  acknowl- 
edge, that  we  must  have  paper  money  in  addition  to  coin,  and  if  we 
also  take  the  position,  as  I  do,  that  the  Government  alone  can  safely 
be  intrusted  with  this  vast  power  over  all  these  industries,  over 
profits,  over  property,  over  enterprise,  over  prices,  and  that  there 
must,  for  convenience  and  sufficiency,  be  supplemental  paper 
money,  you  may  ask  me  very  pertinently,  what  is  to  be  the  vol- 
ume? What  are  the  demands  of  business?  What  amount  will  be 
proper?  Let  us  see  if  I  can  answer  that  question.  I  would  say, 
begin  at  once  by  issuing  full  legal-tender  Treasury  notes  for  the 
most  immediate  relief  pending  time  necessary  to  coin  silver,  and 
let  silver  be  freely  coined  up  to  the  capacity  of  the  mints. 

There  is  a  loud  outcry  to-day  for  the  locking  up  and  the  can- 
cellation of  the  legal-tender  notes.  That  seems  to  be  a  clamorous* 
demand  from  Wall  street  and  financial  communities,  but  do  you 
know  in  whose  interest  that  outcry  is  made?  Who  is  it  that  is 
demanding  the  return  and  cancellation  of  the  legal-tender  paper 
money  isstied  by  the  Government?  The  people  generally  do  not 
demand  the  destruction  of  the  greenback  money  in  circulation. 
The  demand  comes  from  those  who,  either  intentionally  or  unin- 
tentionally, are  favoring  the  banks  of  issue  and  would  increase 
the  opportunities  of  those  banks  to  supply  the  currency  of  the 
country  in  place  of  the  greenbacks  withheld  or  destroyed. 

It  does  not  come  from  the  people.  It  never  has  come  from  the 
people.  The  people  did  not  demand  the  demonetization  of  silver. 
They  have  no  hatred  toward  either  silver  or  legal-tender  green- 
back currency.  They  will  in  future  rebuke  this  demand  for  the 
cancellation  of  the  greenbacks.  They  do  not  demand  the  with- 
drawal of  the  notes  called  Treasury  notes  issued  under  the  law  of 
1890  for  the  purpose  of  displacing  them  with  bonds  or  with  non- 
legal-tender  bank  notes. 

RESTORATION    OF     PRICES     AND     PROSPERITY     INDICATES     THE     REQUISITB 

VOI^UME. 

Now,  taking  the  prostrate  condition  of  the  country  into  ac- 
count, equity  demands,  the  interests  of  business  and  prosperity 
demand,  the  rights  of  the  people  to  life,  liberty,  and  the  ptarsuit 
of  happiness,  and  the  opportunity  to  obtain  happiness  and  wealth, 
all  demand  that  you  should  expand  the  body  of  money  to  a  de- 
gree sufficient  to  restore  prices,  profits,  and  prosperity.  If  the 
1770 3 


34 

free  coinage  of  silver  and  issue  of  a  certain  quantity  of  legal- 
tender  paper  does  not  give  us  a  sufficiently  expanded  currency  to 
bring  up  jirices  to  a  profitable  range  for  business  prosperity  and 
for  the  employment  of  labor,  then  still  expand  vp^ith  Treasury 
notes  until  business  prosperity  is  reachea  and  then  stop,  but  not 
till  that  comes.  These  notes  should  be  full  legal  tender,  because 
no  otlier  kind  of  money  ought  to  circulate  among  the  people.  The 
paper  money  in  the  pockets  and  hands  of  the  people  ought  to  have 
the  legal  power  to  cancel  debts  of  all  kinds  by  presentation  in 
payment.  The  people  should  not  be  compelled  for  their  general 
circulating  medium  to  depend  on  bank-note  issue  that  you  can  not 
compel  creditors  to  accept  when  tendered  in  payment. 

Mr.  PICKLER.     How  much  capital  would  you  provide? 

Mr.  COFFEEN  of  Wyoming.  Let  me  finish  this  question  of 
volume,  as  that  will  answer  your  question,  I  presume.  I  say  ex- 
pand, if  you  find  it  necessary,  even  beyond  the  free  coinage  of 
silver,  until  you  have  reached  a  point  where  your  enterprise  and 
your  industry — the  productive  and  laboring  energies  of  your 
peoi)le — are  utilized  to  the  best  advantage,  and  there  stop  except 
to  keep  the  volume  increasing  as  wealth  and  population  and 
business  increase.  If  that  amounts  to  $40  per  capita  issue  that 
much,  and  stop  at  $40.  If  it  is  $50,  stop  at  $50.  But  go  on  un- 
til the  productive  energies  of  your  people  are  utilized  to  the  best 
advantage. 

Ajiy  Congressman  who  sits  on  this  floor,  I  care  not  from  what 
State  he  hails,  who  will  stop  short  of  that  which  is  necessary  to 
the  utilization  to  the  best  advantage  of  the  energies  of  the  people 
of  this  country,  is  not  the  statesman  who  ought  to  represent  his 
people  here.  [Applause.]  Therefore  I  say  go  on  with  the  expan- 
sion and  you  ^n^II  not  need  to  go  very  far  to  attain  the  desired  result. 
The  very  announcement  of  this  policy  wall  be  hailed  with  delight 
by  three-fourths  of  the  people.  Perhaps  the  unlimited  coinage  of 
silver  with  right  to  deposit  the  silver  coin  against  legal-tender 
notes  may  accumplish  the  proper  rise  in  prices.  With  silver 
freely  coined  and  legal-tender  paper  as  far  as  necessary  as  supple- 
mentary to  coin  go  on  by  proper  gradations  imtil  you  have  util- 
ized the  energies  of  the  nation  to  the  best  advantage.  This  is 
not  difficult  to  understand,  and  the  point  to  which  expansion 
should  be  carried  and  where  expansion  should  stop  are  matters 
as  easily  determined  as  any  other  matter  upon  which  we  legislate. 
As  you  ex^jand  the  volume  of  your  currency  prices  will  rise  in 
equal  ratio.  As  prices  rise  profits  will  accrue,  for  profits  in  all 
kinds  of  business  depend  on  the  rise  or  at  least  the  maintenance 
of  prices,  and  as  profits  accrue  labor  will  be  fully  employed. 
1770 


35 

INCREASING  VOLUME  GIVES  EMPLOYMENT  TO  LABORERS. 

Your  3,000,000  tramps  in  this  country  forced  out  of  employ- 
ment by  the  bankers'  panic  of  1893,  the  object  lesson  to  illustrate 
the  gold  standard  ideas  of  money,  will  be  needed,  every  one  of 
them;  and  they  will  all  be  invited,  at  good  fair  wages,  into 
employment  and  activity.  This  will  surely  come  about  by  the 
efforts  of  employers  of  labor  to  get  the  benefit  of  the  profits  ac- 
cruing by  the  rise  in  prices  and  the  expansion  of  the  volume  of 
money.  Realizing  that  the  rise  in  prices  means  increase  of  profit, 
and  that  increase  of  profit  means  the  employment  of  the  labor 
and  energies  of  the  nation,  when  you  find  you  have  reached  that 
point,  then  in  view  of  equity  to  the  creditor  class,  I  would  stop 
expanding  the  currency  beyond  the  proper  ratio  to  business,  but 
would  continue  it  at  a  ratio  which  would  always  maintain  rea- 
sonable prices.  To  stop  short  of  that  is  contraction,  and  I  care 
not  what  your  currency  system  may  be,  it  is  unjust  to  the  people 
to  have  a  volume  of  currency  that  does  not  expand  with  expansion 
of  business. 

Money  does  not  serve  to  exchange  commodities  only,  but  must 
also  be  a  standard  of  equitable  payment  and  the  support  of  prices 
that  will  yield  just  reward  to  labor  and  enterprise.  A  contract- 
ing or  diminishing  volume  of  money  can  not  maintain  equity  nor 
support  prosperity.  Neither  can  a  stationary  volume  answer  in 
a  growing  country  or  increasing  population  or  expanding  busi- 
ness. Expanding  the  mass  of  wealth  demands  for  equity  the  ex- 
pansion of  the  volume  of  money  in  circulation . 

Banks  already  have  enough  power  over  prices  without  giving 
them  power  to  issue  or  contract  the  volume  elastically  at  their 
pleasure. 

Mr.  WARNER.  Allow  me  to  ask  my  friend  how  he  would 
secure  the  putting  out  of  this  money  in  order  that  it  should  be 
properly  distributed? 

Mr.  COFFEEN  of  Wyoming.  I  will  answer  my  friend  from 
New  York.  It  is  an  old  question.  We  have  had  it  asked  for 
twenty  years — if  the  Government  issues  money  how  will  you  get 
it  out  among  the  people?  By  paying  it  out  for  services,  salaries, 
supplies,  and  so  on,  as  all  paper  money  issued  and  reissued  is  now 
paid  out  and  distributed. 

Mr.  WARNER.    Among  the  right  people. 

Mr.  COFFEEN  of  Wyoming.  Yes;  among  the  right  people. 
It  circulates  and  goes  out  in  a  thousand  channels  to  the  end  of  the 
country. 

Mr.  WARNER.    We  do  not  want  it  congested  at  a  few  points. 

Mr.  COFFEEN  of  Wyoming.  No;  when  contraction  comes 
1770 


36 

and  prices  fall  as  they  do,  follo%ving  any  great  and  sudden  contrac- 
tion of  the  currency,  money  always  flows  to  the  money  centers. 
Congestion  of  money  itself  is  a  sign  that  money  has  been  contracted 
and  enterprise  retarded  and  prices  have  fallen.  When  gentlemen 
are  discussing  this  question  before  the  farming  community  they 
say,  "  How  are  you  going  to  get  your  share  of  this  money  unless  you 
have  something  to  sell  or  exchange  for  it?"  I  say  that  if  pi'ices 
rise  as  they  will  in  proportion  to  the  expansion  of  money,  the 
fanner  will  not  only  be  able  to  get  something  for  what  he  sells,  but 
will  command  a  better  price,  which  all  of  us  agree  he  should  justly 
have,  for  we  all  know  he  does  not  get  justice  under  the  present 
range  of  prices.  If  the  people  of  the  interior  and  West  and  South 
had  been  able  to  get  prices  that  should  have  been  maintained  on 
their  produce  and  manufactures  they  would  have  that  much  more 
money  and  wealth  to  command  money  among  themselves,  and 
monej'  would  have  been  out  among  the  right  people  instead  of 
being  congested  at  New  York. 

Gentlemen  say  there  is  a  deficit  in  the  Treasury;  but  this  is  not 
altogether  on  account  of  the  tariff  question;  it  is  very  slightly 
owing  to  the  tariff  question.  It  is  because  of  a  paralysis  of  the 
industries  and  acti\nties  of  the  coiintry,  a  destruction '  of  the 
ability  of  the  people  to  obtain  prices  and  money  sufficient  on  what 
they  do  sell,  and  shrinking  of  prices  also  as  well  as  quantity  on 
imports  that  cut  short  Government  revenues.  When  people  get 
good  prices  they  readily  consume,  more  of  home  products  and 
more  of  imports  as  well,  and  thus  the  revenues  of  the  Government 
are  more  abundant.  A  shrinking  volume  of  money  is  destruc- 
tive of  revenues  and  resources  of  the  laboring  people,  and  for  the 
same  reason  of  the  Government  also.  All  suffer  that  the  money 
dealer  may  appreciate  his  money  and  get  advantages  of  the  debtor 
classes. 

Hear  Mr.  St.  John,  president  of  the  Mercantile  National  Bank, 
of  New  York,  in  his  evidence  before  the  Currency  Committee, 
page  352  of  the  hearings: 

Mr.  St.  John.  Primarily  and  underlying  the  whole  thing  is  the  fact  that 
the  aggregate  sura  of  money  in  the  United  States  is  not  sufficient.  If  there 
were  a  general  business  revival  in  the  United  States  we  would  have  a  pain- 
fully stringent  money  market  within  ninety  days.  That  is  one  answer  to 
the  question. 

Mr.  Johnson  of  Indiana.  Is  it  not  a  fact  that  at  the  very  time  that  these 
people  in  the  agricultural  sections  are  complaining  about  the  scarcity  of 
money  there  are  large  quantities  of  money  lying  idle  and  congested  in  the 
money  centers? 

Mr.  St.  John.  Undoubtedly  so,  as  I  thought  I  had  explained. 

Mr.  .Johnson  of  Indiana.  Then  would  you  say  that  the  reason  why  this 
complaint  exists  is  that  there  is  not  sufficient  money  for  the  purpose  of  mov- 
ing the  crops? 
1770 


37 

Mr.  St.  John.  I  would,  undoubtedly.  When  I  find  an  accumulation  in  every 
bank  of  Europe  greater  this  year  than  for  years  past,  I  know  there  is  a  reason 
for  it.  The  increase  of  the  aggregate  money  of  the  world  is  stopped,  except 
as  one  can  provide  4.03  pounds  of  gold  when  he  wants  to  add  a  thousand  dol- 
lars to  it.    Distrust  is  the  concomitant  and  distress  the  achievement. 

Mr.  Johnson  of  Indiana.  Is  the  reason  why  money  can  not  be  had  in  agri- 
cultural districts  in  sufficient  quantities  to  enable  the  crops  to  be  moved 
because  of  the  fear  among  lenders  that  there  is  no  security  for  the  money? 

Mr.  St.  John.  It  is  one  and  a  sufficient  reason  for  bank  caution.  The  people 
who  are  making  these  complaints,  and  justly  too,  I  think,  are  not  prosperous. 
They  are  mortgaged  to  death  to  their  factory  and  stoi*es  and  country  mer- 
chants. "What  they  mortgage  their  homes  and  crops  for  is  dollars.  If  their 
product  will  not  yield  dollars  they  can  not  pay  their  debts.  Cheap  overcoats 
do  not  concern  the  planter  and  farmer  unless  dollars  are  the  outcome  of  their 
crops. 

I  have  said  that  the  aggregate  of  all  our  money  is  our  measure  of  all  values. 
It  follows  that  the  aggregate  of  money  must  increase  with  the  aggregate  of 
the  commodity  considered  if  the  price  of  that  commodity  is  to  remain  un- 
changed. Large  volume  of  wheat,  low  price  for  it;  large  volume  of  dollars, 
low  value  of  dollars.  I  do  not  mean  interest  value  of  dollars.  I  mean  rela- 
tive value  of  wheat  and  dollars.  High  prices  for  flour  and  high  rates  of  in- 
terest are  found  together.  We  see  this  conjunction  in  mining  districts.  To 
be  brief,  it  is  the  fact  that  the  world's  growing  abundance  of  the  necessaries 
and  luxuries  is  surpassing  the  world's  sufficiency  of  money.  The  prime  suf- 
ferer is  the  producer  of  the  abundance.  Reflectively  and  painfully  all  ele- 
ments suffer  on  account  of  him.    *    *    * 

Mr.  Cobb  of  Alabama.  Is  it  not  a  fact  that  it  is  because  of  this  vast  accumu- 
la  tiou  of  money  in  New  York,  and  a  number  of  other  cities,  that  the  country 
is  not  generally  prosperous?     • 

Mr.  St  John.  These  accumulations  are  not  the  cause;  they  are  one  evi- 
dence of  the  lack  of  prosperity. 

Mr.  Cobb  of  Alabama.  Have  you  any  opinion  as  to  what  causes  this  want 
of  general  prosperity,  whether  it  is  from  natural  conditions,  or  from  the  re- 
sult of  operations  of  law,  or  what  is  your  idea? 

Mr.  St.  John.  My  opinion  is  that  the  aggregate  sum  of  money  in  the  United 
States  is  insufficient  to  establish  confidence  in  its  ability  to  meet  the  demands 
upon  it  under  ordinary  prosperity.  Also,  our  money  has  a  scarcity  value  pro- 
portionate to  our  abundance  of  the  commodities  which  it  values.  "  Prices,"  or 
dollar  valuation  of  commodities,  is  ruinous  to  those  who  provide  pi  osperity 
(by  labor  and  production)  when  we  have  any. 

Mr.  Cobb  of  Alabama.  What  remedy  can  you  suggest? 

Mr.  St.  John.  Enlarging  the  primary  money  of  the  United  States. 

Mr.  Cobb  of  Alabama.  How? 

Mr.  St.  John.  Abandon  ex  periment  and  go  back  to  eighty  years  of  our  own 
experience  and  the  world's  experience  in  money. 

Mr.  Cobb  of  Alabama.  In  your  opinion,  would  that  give  us  a  more  general 
dissemination  of  the  volume  of  money  in  the  country? 

Mr.  St.  John.  It  would  decidedly.  May  I  read  my  answer  to  that  Inquiry 
on  another  occasion?    I  assume  that  I  may. 

"At  this  present  moment  a  dollar,  as  the  means  of  acquisition  and  measure 
of  value,  is  more  efficient  than  in  any  other  period  of  recent  years,  prices  of 
staple  commodities  being  ruinously  low.  And  yet  at  this  same  time  money 
seeking  wages,  entitled  interest,  seeks  employment  vainly,  or  at  rates  that 
barely  pay.  Under  these  conditions  fixed  capital  suffers  in  the  failure  of 
investments,  the  banker  suffers  as  a  lender,  the  merchant  in  the  restricted 
1780 


38 

distribution  of  commodities,  the  manufacturer  and  other  producer  in  the 
current  low  prices,  and  labor  in  want  of  employment  starves.  In  the  mutual 
relations  between  these  elements  of  the  people,  accumulated  wealth  loses  in 
the  reduction  of  its  income,  but  regains  a  portion  in  the  increased  efficiency 
f  if  the  remainder  as  related  to  the  commodities  which  he  consumes.  No  other 
one  of  these  elements,  as  such  other,  has  profited  at  all.  Labor  has  lost  every- 
thing in  losing  its  employment.  The  enduring  fact,  therefore,  if  these  func- 
tions in  money  were  the  only  ones  to  be  preserved,  would  be  'the  rich  made 
relatively  richer  at  the  expense  of  the  poor  made  poorer,'  as  one  achievement 
of  statute  law." 

HOW  TO  QET  GOVERNMENT  LEGAL  TENDERS  INTO  CIRCULATION. 

But  to  answer  more  explicity  and  fully,  how  can  the  Govern- 
ment get  its  issues  of  paper  money  into  circulation?  This  is  easily 
answered.  The  yearly  expenses  of  the  Government,  current  ex- 
penses, are  nearly  ,$.500,000,000,  about  $40,000,000  per  month,  nearly 
$10,000,000  per  week,  far  above  $1,000,000  per  day. 

Let  tlie  Governiiiont  pay  out  and  distribute  the  legal-tender 
notes  that  should  be  issued  in  the  current  expenses.  Will  not 
this  be  practicable  and  convenient  and  safe?    Certainly  so. 

And  would  it  not  distribute  it  with  sufiScient  rapidity?  Yes, 
far  too  much  so.  If  one-half  of  the  current  expenses  of  the  Gov- 
ernment were  paid  by  issues  of  legal-tender  notes,  it  would  be 
abundantly  rapid  to  cure  present  stagnation  in  three  to  six  months' 
time.  It  would  be  at  the  rate  of  $20,000,000  per  month,  and  this 
would  immediately  revive  business,  with  the  promise  of  better 
prices,  profits,  and  success  in  all  kinds  of  manufacturing  and  pro- 
ductive enterprise. 

Tliis  would,  at  the  same  time,  very  quickly  cure  the  deficiency  in 
the  Treasury  and  help  out  the  Government  as  well  as  the  people. 
But  wotdd  it  go  to  the  right  people?  Very  quickly,  for  tlirough 
the  salaries  of  Government  officials  and  in  payment  of  sup- 
plies and  other  expenses  it  would  go  to  all  parts  of  the  country  and 
render  money  more  abundant  everywhere. 

DIFFERENT  PLANS  FOR  BANK  CURRENCY  PROPOSED. 

We  are  all  .agreed  that  our  present  mongrel  system  of  currency 
is  wrong,  dangerous  to  prosperity,  fuU  of  confusion,  and  full  of 
injustice  to  all  the  laboring  and  debtor  and  property-holding 
classes. 

It  is,  by  its  variations,  contractions,  and  manipulations,  used 
constantly  to  break  the  equities  of  all  time  contracts,  lower  gen- 
eral range  of  prices,  and  rob  debtors  of  their  rights  and  products. 

We  are  all  agi-eed  that  a  remedy  for  these  evils  and  relief  from 
confusion  should  be  applied. 

What  remedies  are  proposed? 

PLANS    TO  AMEND  PRESENT  SYSTEM. 

One  is  to  give  more  power  to  the  banks  by  issuing  to  them  a 
greater  amount  of  currency  without  compensation— that  is,  by 
177C 


39 

isstiing  to  them  not  only  90  per  cent  on  their  deposits  of  United 
States  bonds  at  a  charge  of  I  per  cent  per  year,  but  to  furnish  them 
100  per  cent  or  possibly  114  per  cent  while  the  Government  bonds 
stand  at  14  per  cent  premium  and  release  them  also  from  paying 
even  1  per  cent  tax  or  interest  on  this  currency  furnished  thus 
to  the  banks,  and,  as  in  all  of  these  bank  plans,  it  provides  for  the 
issuance  of  more  bonds  payable  in  gold. 

OTHER  BONDS  FOR  SECURITY. 

Another  is  to  allow  banks  to  deposit  other  than  United  States 
bonds  for  security,  and  yet  make  the  Government  liable  for  ulti- 
mate redemption  of  all  the  bank  notes  and  issue  gold  bonds  in 
place  of  the  greenbacks. 

BALTIMORE  PLAN. 

Another  plan  is  to  allow  banks  to  have  a  national  form  of  cur- 
rency printed  for  them  that  may  be  issued  and  loaned  out  as  notes 
of  the  banks  based  nominally  on  bank  assets,  but  the  Government 
to  guarantee  ultimate  redemption.  This  is  the  Baltimore  or  bank- 
ers' own  plan. 

CARLISLE  PLAN. 

Another  is  to  practically  turn  the  entire  responsibility  of  supply- 
ing currency  over  to  both  State  and  national  banks  under  a  sort  of 
supervisory  provision  upon  deposit  of  a  5  per  cent  and  30  per  cent 
fund  in  legal  tenders;  but  relieving  the  Government  entirely  from 
all  responsibility  of  final  redemption  of  circvilating  bank  notes. 

ECCLES  PLAN. 

Another  is  to  take  50  per  cent  of  assets  of  the  bank  on  which  to 
determine  amount  of  note  issues  allowed  to  the  banks,  and  an  ad- 
ditional amount  may  be  allowed  them  under  heavy  Government 
charge  or  taxation  as  an  emergency  currency. 

WHAT  THESE  AND  OTHER  BANK  PLANS  INVOLVE. 

All  of  these  plans  involve  the  following: 

1.  The  banks  to  control  the  volume  of  currency. 

2.  The  banks  to  secure  all  the  profits  on  currency. 

3.  The  banks  to  be  allowed  to  exercise  the  principle  called  elas- 
ticity, another  name  for  sudden  contraction  or  expansion,  as  their 
own  profits  may  dictate  without  public  notice  and  without  regard 
to  the  rights  or  needs  of  the  people  generally. 

4.  The  banks  to  protect  one  another  as  note  holders  (for  they 
axe  the  principal  holders  of  bank  notes  under  the  deposit  system  of 
our  country),  while  depositors  are  left  completely  improtected. 

5.  The  banks  to  have  to  themselves  and  all  creditor  classes  all 
the  benefits  of  a  highly  appreciated  gold-standard  money,  possess- 
ing double  the  purchasing  power  that  money  should  have  in  ex- 

1770 


40 

chanKe*  for  all  other  property,  while  the  burden  of  maintaining 
the  ijold  redemption  for  a  tiiue  and  the  dishonor  of  an  ultimate 
and  a  certain  ])reakdown  will  fall  on  the  Government. 

G.  The  banks  to  have  all  and  unrestricted  opportunity  for  pool- 
ing their  interests  and  to  have  all  limitations  that  are  disagreeable 
to  them  removed  under  the  pretense  of  removing  obstructions  to 
elasticity. 

7.  The  banks  and  money  dealers  to  have  the  most  absolute  nad 
fully  legalized  control  over  the  prices  and  values  of  all  property, 
all  profits,  all  industries,  all  eciuities  of  contract,  and  through 
these  channels  they  will  have  the  most  complete  control  over  all 
political  power  and  governmental  administration  that  the  world 
has  ever  seen  in  any  age  or  clime. 

8.  If  there  is  anything  else  in  sight  that  Congress  can  give  them 
they  will,  as  humble  conservators  of  financial  integrity  and  wis- 
dom and  as  saviors  of  the  country  in  its  time  of  need,  accept  that 
also. 

WILL  THE  PEOPLE  HOW   UOWN? 

Will  the  people  of  America  bow  down  to  worship  fn  abject  servi- 
tude this  golden  image  of  the  modern  Babylon  and  the  money  sjti- 
dicates  of  the  empire  of  wealth?    Will  Congressmen  bow  down? 

It  might  possibly  have  some  eif ect  on  the  cowardly  Congressmen 
who  have  so  far  forgotten  their  constituencies  to  have  the  Chap- 
lain of  the  House  start  up  the  Sunday-school  song  of  "  Dare  to  be 
a  Daniel."  Imagine  the  cuckoos  and  followers  of  Senator  John 
Sherman  singing  that  song. 

There  are  times  and  crises  among  all  peoples  who  seek  to  main- 
tain liberty  and  justice  that  try  the  courage  of  discerning  minds. 

Such  a  trial  is  now  impending  over  you  who  sit  here  to  either 
protect  or  betray  the  rights  and  liberties  of  70,000,000  people. 

What  will  you  do? 

Has  the  fad  of  elasticity  become  epidemic?  Has  the  disease  at- 
tacked your  backbone?  If  so,  have  the  manliness  to  resign  and 
go  home  to  your  people  and  you  will,  by  freely  mingling  with 
them  and  avoiding  the  blandishments  of  wealth,  soon  regain 
stamina  and  a  clearer  vision  of  the  rights  of  mankind  in  its  great 
contest  with  the  combinations  of  wealth  and  iniquity.  Byron 
said,  in  his  Song  of  the  Greek  Poet,  in  trying  to  arouse  the 
Greeks  to  regain  their  lost  liberty- — 

Must  we  but  weep  o'er  days  more  bless'd? 

Must  tve  but  blush?— Our  fathers  bled. 
Earth:  render  back  from  out  thy  breast 

A  remnant  of  our  Spartan  dead! 
Of  the  three  hundred  grant  but  three, 
To  make  a  new  Thermopylae  I 
1770 


41 

STAND  AGAINST  ALL  EVIL  SYSTEMS  OP  LEGISLATION. 

•  But,  Mr.  Chairman,  they  tell  iis  we  must  choose  between  the 
evils  of  the  present  system  and  the  imperfections  of  the  Carlisle 
plan  of  currency  reform.       , 

I  have  no  hesitancy  in  sajdng  that  if  such  were  the  only  alter- 
natives I  would  prefer  the  plan  of  the  Secretary,  which  will  give 
temporary  relief  and  break  for  a  time  at  least  the  intolerable  mo- 
nopoly of  the  money  power  and  the  international  gold  conspiracy 
manifest  in  Wall  street  as  well  as  in  Europe. 

But,  sir,  our  case  is  not  so  desperate  as  they  would  have  us  be- 
lieve. There  is  another  alternative — that  of  opposing  all  schemes  of 
the  gold  and  bank  and  bond  forces,  and  standing  and  fighting  to 
the  end  for  a  true  and  simple  plan  of  Government  issue  and  Gov- 
ernment control  of  the  volume  of  money  in  circulation  against 
all  theories  of  bank  issues  and  bank  control. 

Mr.  Chairman,  there  is  still  another  way  out  of  the  difficulty. 
When  our  revolutionary  sires  were  told  that  they  must  submit 
to  the  new  demands  of  the  British  King  and  Parliament  or  suffer 
fines,  penalties,  and  imprisonment,  they  responded  that  they  would 
not  submit  to  either,  but  would  choose  a  pathway  and  course  of 
action  of  their  own,  and  from  one  end  of  the  country  to  the  other 
camp  fires  were  kindled  and  the  humble  but  brave  colonists 
formed  in  lines  of  battle. 

The  King  found  out  that  the  American  Colonies  would  not  sub- 
mit, bat  were  determined  to  choose  alternatives  of  their  own. 

So,  now,  we  choose  neither  your  bill  nor  the  present  banking 
law.  but  go  to  the  country  on  appeal  from  both. 

Who  controls  the  volume  of  currency  in  circulation  controls  the 
welfare  of  the  people,  for  the  most  fundamental  and  universally 
admitted  truth  in  monetary  science  is  that  volume  controls  price. 
To  control  price  is  to  control  profits,  to  control  property,  to  con- 
trol all  branches  of  ind^^stry,  and  to  control  the  happiness  and 
prosjierity  of  the  people  and  the  safety  of  our  Republic. 

Therefore  we  must  never  surrender  this  control  to  the  banks  or 
to  any  other  one  class  of  citizens  whatsoever. 

The  Government  must  hold  against  all  combinations  of  private 
capital  the  right  to  issue  and  coin  all  money  for  general  circula- 
tion and  control  its  volume  in  the  interest  of  industry  and  equity. 

This  is  the  main  question — this  is  the  vantage  ground  over 
which  the  battle  is  raging.  Who  shall  control  the  aggregate 
volume  of  currency  in  circulation  thus  to  regulate  value  of  money 
for  purchase,  exchange,  and  payment,  and  thus  to  protect  property 
and  prices  for  all  producers  and  maintain  the  equity  of  all  time 
payments. 

There  are  other  incidental  questions. 


42 

To  maintain  compulsory  redemption  of  all  currency  in  gold  is 
to  cramp  and  limit  the  people  to  the  conditions  of  the  dark  ages, 
and  subject  the  welfare  of  mankind  to  the  tricks  of  those  who 
have  their  clutches  upon  and  practical  control  of  all  the  gold 
available  in  the  world. 

GOLD  MONOMBTALLISM  WILL  END  IN  OOLLAPSB, 

The  gold  standard  or  gold  monometallism  is  a  failure,  and  it  can 
not  be  otherwise. 

There  is  great  gain  and  power  and  wealth  in  it  for  those  who 
control  and  manipulate  the  supply  of  gold,  but  for  the  people  and 
the  nations  there  is  no  wisdom  or  equity  in  it — no  progress,  no 
chance  even  to  maintain  the  present  status  of  civilization.  It 
hangs  like  a  pall  over  the  commercial  world. 

It  is  the  most  stupendous  and  unjustifiable  experiment  ever 
forced  upon  mankind,  and  is  followed  by  a  long  train  of  injustice 
and  extortion.  It  is  transferring  the  wealth  and  property  of  the 
industrial  and  debt  and  tax  paying  millions  to  the  money  dealers, 
until  here,  at  the  close  of  a  century  of  wealth  production  exceed- 
ing perhaps  that  of  any  three  centuries  preceding,  the  net  results 
of  this  marvelous  wealth  production  is  passing  out  of  the  posses- 
sion of  the  producer  into  the  possession  and  control  of  the  money 
power. 

This  I  have,  as  I  believe,  clearly  shown  by  a  strong  array  of 
facts  and  monetary  statictics  on  a  former  occasion  in  my  speech 
on  Money,  Banks,  and  the  Debts  of  the  "World. 

I  have  also  shov^m  that  civilization  must  break  down  or  the 
gold  standard  be  abandoned. 

Mankind  and  the  imiversal  product  of  all  his  toil  and  invention 
are  greater  than  the  one  little  yellow  product  called  gold:  so, 
even  if  the  gold  standard  must  be  abandoned,  man  and  liberty 
must  survive.  Gold  must  again  be  conqiiered  and  made  a  servant 
instead  of  a  master  by  the  sovereignty  of  law. 

When  I  think  of  the  cruelty  ot  the  gold  power  and  how  easily 
the  prolonged  suffering  of  our  impoverished  workers  might  be  re- 
lieved by  abandoning  the  gold  standard  and  securing  a  sufficient 
supply  of  money  through  the  sovereign  power  of  government  I 
think  of  the  poet's  song: 

'  Tis  for  this  they  are  dying  where  the  golden  corn  is  growing, 
'  Tis  for  thLs  they  are  dying  where  the  crowded  herds  are  lowing, 
'  Tis  for  this  they  are  dying  where  the  streams  of  life  are  flowing, 
And  they  perish  of  the  plague  where  the  breeze  of  health  is  blowing. 

The  remonetization  of    silver,  although  a  gi-eat  question  and 
under  present  conditions  so  important  to  the  welfare  of  this 
nation,  is  yet  an  incidental  matter  and  a  subordinate  question  to 
1770 


43 

this  greater  question  of  the  control  of  the  total  volume  of  money 
in  circulation. 

Silver  remonetization  will  double  the  metallic  base  of  coin  re- 
demption money  and  successfully  break  the  present  control  of  the 
European  gold  power  over  the  welfare  of  America. 

But  neither  silver  nor  gold  alone  nor  both  in  conjunction  can 
in  themselves  furnish  an  adequate  volume  of  money  for  the  pres- 
ent stage  of  civilization. 

Paper  money  is  necessary  to  supplement  the  supply  of  gold  and 
silver,  and  this  is  generally  admitted  by  all  competent  authority. 
So  we  come  again  to  the  question,  Who  shall  issue  the  paper  money 
and  who  control  its  volume? 

We  answer  again,  unhesitatingly,  that  the  Government  must 
coin  and  issue  all  money,  for  there  is  no  other  way  in  which  it  can 
control  the  aggregate  volume.  Coming  to  a  more  direct  consid- 
eration of  the  pending  currency  bill,  which  has  been  prepared  by 
the  honorable  Secretary  of  the  Treasury  himself,  and  is  so  gen- 
erally known  as  the  Carlisle  plan,  I  am  astonished  to  find  him  tak- 
ing such  an  interest  in  upholding  banking  institutions  to-day  for 
the  issuance  of  money,  independent  of  the  United  States  bonds, 
for  the  marketing  of  which  the  tiational  banks  were  created,  as 
shown  by  Mr.  Carlisle  himself.  His  plan  divorces  all  new  banks 
of  issue  from  the  deposit  of  Government  bonds. 

Perhaps  no  man  in  America  has  more  strongly  contended,  in 
these  very  halls,  that  the  only  sufficient  excuse  for  the  creation  of 
national  banks  and  conceding  to  them  the  privilege  of  issuing 
paper  money  was  to  provide  a  market  for  the  bonds. 

He  even  contended  that  except  for  this  purpose  of  making  the 
banks  to  a  degree  agencies  of  the  Government  to  facilitate  the 
placing  and  marketing  of  bonds  the  Federal  Government  would 
not  have  been  competent  under  the  Constitution  to  create  such 
corporations. 

Hear  what  he  said  on  March  1,  1881,  found  in  Appendix  to  the 
Record  for  the  third  session  of  the  Forty-sixth  Congress,  page 
247: 

What  was  the  primary  purpose  of  the  Government  in  establishing  this  sys- 
tem in  the  first  instance?  If  any  gentleman  entertains  a  doubt  upon  this  sub- 
ject let  him  read  the  reports  in  which  Mr.  Chase,  then  Secretary  of  the  Treas- 
ury, suggested  and  recommended  the  passage  of  the  original  national-bank 
act,  and  he  will  be  convinced  that  the  principal  purpose  of  that  eminent 
financier  was  to  create  a  certain  demand  and  reliable  market  for  Govei-nment 
securities.  Considered  with  reference  to  that  purpose,  it  was  unquestion- 
ably a  wise  stroke  of  financial  policy,  and  it  justly  won  for  its  author  the 
highest  encomiums  from  ministers  of  finance  in  all  parts  of  the  world.  In 
fact,  the  constitutional  power  of  Congress  to  create  these  corporations  can 
not  be  maintained  except  upon  the  ground  that  they  were  to  constitute,  when 
organized,  agencies  of  the  Government  for  certain  public  purposes. 
1770 


44 

He  then  quotes  Chief  Justice  Marshall  to  establish  his  position, 
and  later  takes  up  tli6  evils  of  contraction  and  elasticity  in  bank 
issues.  I  will  quote  further  what  INIr.  Carlisle  has  said  of  allow- 
iiif<  1  tanks  to  contract  and  expand  wlieni  come  to  show  that  banks 
should  be  dei)rived  of  all  privilege  of  issuance. 

So  we  find  now  that  instead  of  supporting  the  national  banks 
as  an  agency  of  the  Government,  requiring  them  to  deposit  bonds 
and  thus  aid  the  Government  in  placing  and  marketing  bonds,  he 
projjoses  to  perpetuate  the  banks  for  their  own  profit  simply  ( w'hich 
he  has  sho\vn  could  not  constitutionally  be  done),  and  allow  them 
issue  privileges  in  increased  degree  and  he  would  stop  any  further 
use  of  bonds  to  secure  circulation. 

The  rights  of  the  people,  safety  against  contraction  of  currency, 
and  even  the  Constitution  itself  as  it  once  appeared  to  him  are 
now  thrown  overboard. 

He  still  sells  bonds,  but  weakens  the  market. 

He  points  out  how  the  bankers  and  exporters  raid  the  Treasury 
for  gold  on  coin  obligations,  yet  refuses  to  pay  them  silver  coin  and 
protect  the  rights  of  the  Government. 

He  claims  that  silver  ought  to  be  kept  at  a  parity,  yet  keeps  it 
in  sulijection  and  disgrace. 

The  very  Treasiiry  notes  paid  out  for  silver  he  insists  must  be  paid 
in  gold  instead  of  silver,  if  exporters  and  speculators  demand  it. 

To  me  it  seems  clear,  as  I  have  said,  that  the  way  to  stop  the 
drainage  of  gold  is  to  stop  it. 

He  has  the  legal  power  unquestionably. 

It  is  just  to  the  people  that  silver  should  be  paid  when  gold  is 
in  sliort  supply. 

He  should  do  the  proper  thing  and  stop  the  drainage.  [Ap- 
plause.] 

OUU  SECRETAHY  YOKED  TO  REPUBLICAN  DOCTRINE. 

Like  all  former  Secretaries  of  the  Treasury  for  the  last  twenty- 
five  years  he  has  yoked  himself  to  the  bank  and  bond  and  gold 
scheme,  and  so  upon  the  most  doubtful  authority  sells  bonds  under 
the  pretense  of  maintaining  coin  redemption  for  greenbacks  and 
Treasury  notes,  while  the  vaults  are  filled  with  hundreds  of  mil- 
lions of  full  legal-tender  silver  coin  and  with  tons  of  bullion  out  of 
which  more  should  be  coined  if  needed. 

You  have  heard  of  the  man  in  the  old  settlements  who  had  one 
fine  yearling  steer  that  he  thought  best  to  subdue  and  train  up  in 
a  good,  proper  manner;  so  he  yoked  himself  up  with  the  steer  to 
break  him.  All  went  well  for  a  little  time,  until  the  steer,  becom- 
ing disgusted  with  the  situation,  started  with  the  man  down  the 
lane  furiously.     When  the  neighbors  called  out  to  the  man,  ask- 

1771) 


45 

ing  where  they  were  going,  the  very  proper  reply  of  the  man  was, 
' '  I  don't  know — ask  the  steer. "  And  he  loudly  called  on  all  to  stop 
them,  if  they  could,  for  he  believed  they  were  "  running  away." 

So  this  Administration  has  yoked  itself  to  the  Anglo-American 
gold  and  bond  scheme,  and  unless  stopped  soon  it  may  land  in 
the  arms  of  the  Republican  party  in  this  financial  runaway. 

"The  way  to  resume,"  said  Greeley,  "  is  to  resume."  Were  he 
alive  to-day  he  woiild  say  the  way  to  stop  doing  the  impractical 
thing  and  stop  paying  out  gold  voluntarily  is  to  stop  it. 

The  fact  was  clearly  brought  out  a  few  days  ago  by  the  gentle- 
man from  New  York  [Mr.  Hendrix]  that  France,  the  greatest 
gold  and  silver  holding  nation  in  the  world,  through  the  Bank  of 
France  and  for  the  protection  of  the  Government,  refuses  to  pay 
out  over  5  per  cent  of  gold  on  demand  when  raids  are  made  for 
export,  and  pays  out  instead  95  per  cent  in  silver.  Will  any  one 
say  that  France  is  therefore  and  thereby  thrown  on  a  silver  basis? 

Will  anyone  say  France  thereby  endangers  her  credit? 

Does  it  not  in  fact  give  confidence  in  a  government  to  see  it  use 
its  options  in  all  financial  matters  in  the  interest  of  its  own  people 
and  their  treasury  instead  of  the  gold-mongers? 

Nearly  all  Treasury  obligations  are  payable  by  explicit  terms 
in  coin,  and  it  is  optional  with  the  Secretary  to  pay  in  silver  coin, 
and  he  should  do  so. 

CARLISLE  AS  A  PATRIOT  VERSUS  CARLISLE  IN  THE  PRESIDENT'S  CABINET. 

In  taking  up  the  Carlisle  plan  in  the  bill  pending  I  wish  to  use 
Mr.  Carlisle's  own  testimony  against  the  principles  retained  in 
this  bill,  uttered  by  him  in  ringing  and  patriotic  words  in  his 
speech  of  March  1,  1881,  before  he  had  been  seduced  into  support- 
ing bank  and  bond  issues  and  the  gold  conspiracy  that  he  once  so 
strongly  condemned. 

He  says: 

But,  Mr.  Speaker,  by  far  the  most  dangerous  feature  yet  introduced  into 
tlie  national  banking  system  is  contained  in  that  part  of  the  fourth  section  of 
the  act  of  June  30,  1874,  which  authorizes  the  banks  at  any  time,  and  for  any 
reason  which  they  may  choose  to  consider  sufficient,  to  deposit  lawful  money 
with  the  Treasurer,  contract  the  currency  to  that  extent,  and  withdraw 
their  bonds;  and,  sir,  it  is  not  going  too  far  to  say  that  until  this  feature  is 
wholly  eliminated  or  materially  modified  there  can  be  no  assurance  of  safety 
to  any  legitimate  investment  or  business  enterprise  in  this  country.  If  there 
was  ever  a  doubt  as  to  the  dangerous  character  of  the  power  which  this  part 
of  the  law  gives  to  the  banks  over  the  business  and  property  of  the  people, 
the  arbitrary  and  unjustifiable  proceedings  of  the  last  week  ought  to  dispel 
it  forever.  The  power  was  conferred  in  the  first  instance,  as  I  have  said,  for 
a  special  and  temporary  purpose,  the  equalization  of  the  national-bank  cir- 
culation, but  when  the  resumption  act  of  January  H,  187.5,  was  passed,  which 
removed  all  restrictions  as  to  the  amount  of  such  currency  and  made  the  sys- 
tem entirely  free,  there  was  no  longer  any  necessity  for  this  clause,  and  it 
1770 


46 

8h()ulii  have  boon  instantly  repealed.  It  is  a  standing  menace  against  the 
prosi)erity  of  the  country.  Armed  with  this  destructive  weapon  the  banks 
may  at  any  time,  without  a  moment's  notice  or  a  shadow  of  provocation, 
strike  down  every  industry  and  every  commercial  enterprise  of  the  people. 

He  speaks  of  the  power  given  to  the  banks  to  withdraw  bonds 
for  speculation  and  contract  the  currency  by  depositing  lawful 
money  with  the  Treasurer  as  "the  most  dangerous  feature  yet  in- 
troduced into  the  national  banking  system." 

To-day  he  advocates  releasing  them  from  deposit  of  bonds,  as  in 
the  substitute  bill,  and  the  deposit  of  these  legal  tenders. 

It  may  be  held  l)y  advocates  of  the  Carlisle  plan  that  the  deposit 
of  30  per  cent  of  circulation  in  greenbacks  will  not  contract  the 
currency,  but  the  iioints  I  would  make  in  rei)ly  are — 

First.  That  it  is  optional  with  banks  to  contract  or  expand,  and 
Mr.  Carlisle  points  out  how  they  pervert  and  abtise  the  power 
conferred. 

Second.  That  the  deposit  of  lawful  money  will  contract  the 
amount  of  legal  tenders  in  circulation  just  to  the  extent  that  they 
are  deposited,  and  the  people  must  put  up  with  nonlegal  tenders 
instead. 

Mr.  Carlisle  then  goes  on  to  say: 

The  banks,  or  some  of  them  at  least,  first  began  to  pervert  this  section  of 
the  statute  from  its  original  pur])ose  and  abuse  the  power  which  it  conferred 
upon  them  by  depositing  lawful  money  and  withdrawing  their  bonds  from 
time  to  time,  in  order  to  speculate  upon  them  in  the  market.  They  thus 
withdrew  large  amounts  of  their  circulation  and  contracted  the  currency, 
not  because  the  reduced  demands  of  business  made  the  outstanding  volume 
of  circulation  unnecessary  or  unprofitable,  but  simply  because  they  wanted 
to  realize  the  high  premiums  on  their  bonds  and  speculate  in  the  securities 
upon  which  the  Government  had  already  delivered  to  them  90  per  cent  in 
notes.  These  notes  would  be  left  outstanding  for  the  time  being,  but  an 
equal  amount  of  Treasury  notes  would,  of  course,  be  withdrawn  from  circ-u- 
lation  and  held  at  the  Department  to  redeem  the  bank  notes  as  they  might 
come  in.  The  Treasurer,  in  his  last  annual  report,  describes  this  process  by 
reference  to  actual  transactions  in  his  office;  and  as  his  statement  on  this 
subject  can  not  be  condensed  without  impairing  its  force,  I  give  it  in  his  own 
words.    He  says: 

"  Under  the  construction  placed  upon  the  law  banks  which  have  thus  reduced 
their  circulation  have  been  permitted  to  increase  it  again  as  often  and  as 
largely  as  they  chose,  whether  their  legal-tender  deposits  were  exhausted  or 
not.  An  example  will  better  illustrate  these  operations.  In  .January  and 
February,  1875,  a  certain  bank  reduced  its  circulation  from  $3(J8,490  to  $4.5,(100 
by  deposits  of  legal-tender  notes.    Between  September  26, 1876,  and  May  :26, 

1877,  and  before  that  deposit  was  exhausted,  It  increased  its  circulation  to 
$450,000.  Between  August  14  and  September  10, 1877,  it  again  reduced  its  cir- 
culation to  $4.5,000.  On  September  19, 1877,  nine  days  after  completing  the  de- 
posits for  this  reduction,  it  again  began  to  take  out  additional  circulation, 
although  $402,550  of  prior  deposits  remained  in  the  Treasury,  and  by  the  26th 
of  that  month  its  circulation  had  again  been  increa.sed  to  $4.50,000.    July  22, 

1878,  it,  for  the  third  time,  reduced  its  circulation  to  $45,000,  and  in  August 
and  September,  1879,  again  increased  it  to  $4.50,00(j((  at  which  it  now  remains, 

1770 


47 

the  balance  of  its  former  legal-tender  deposit  then  in  the  Treasury  being 
$112,615."    •    *    * 

This  was  elasticity  for  you.  It  would  seem  that  the  then  Treas- 
urer of  the  United  States  and  the  now  Secretary  of  the  Treasury 
looked  with  suspicion  upon  so  much  elasticity  as  the  banks  then 
possessed  and  even  now  possess. 

It  seems  that  in  1881,  as  at  other  times,  the  associated  banks  could 
and  did  produce  panics  at  will — contracting  the  circulation,  as  Mr. 
Carlisle  says  further  along,  to  the  extent  of  over  $18,000,000  in 
thirteen  days — and  let  me  remark  here  in  passing  that  the  then 
Secretary  of  the  Treasury,  to  rescue  business  from  their  intended 
ruin,  at  once  went  into  the  market  at  New  York  and  bought  bonds, 
which  threw  that  many  more  dollars  at  once  into  circulation,  to 
counteract  the  contraction  of  the  bankers,  but  here  recently,  in 
1893,  when  the  national  banks  contracted  their  circulation  to  the 
extent  of  about  $40,000,000  and  shortened  their  loans  to  produce 
another  panic,  our  present  Secretary,  in  line  with  the  preceding 
Administration,  left  the  people  at  their  mercy,  held  back  silver,  and 
instead  of  buying  bonds  uselessly  assisted  the  raiders  on  the  gold 
reserve  and  sold  bonds  in  exchange  for  the  very  gold  extracted. 

But  let  us  quote  further  from  Mr.  Carlisle. 

He  then  was  fighting  the  powers  he  now  upholds. 
Through  all  that  long  and  fearful  night 
The  prayer  of  Ajax  was  for  light. 

ELASTICITY,  SO  DANGEROUS  THEN.   SO  CHARMING   NOW. 

He  says,  continuing  and  commenting  upon  the  bobbing  up  and 
down  elasticity  of  the  banks  as  shown  by  his  quotation  from  the 
Treasurer's  report: 

No  one  will  contend  that  this  was  a  legitimate  and  proper  method  of  con- 
ducting biisiness  under  the  national  banking  system,  and  yet  it  can  be  resorted 
to  every  day  by  every  .bank  in  the  United  States  as  long  as  the  fourth  section 
of  the  act  of  June  30, 1874,  remains  unrepealed.  It  disturbs  values,  affects  the 
money  market,  and  subjects  the  Government  to  unnecessary  expense  merely 
fco  gratify  a  spirit  of  speculation  and  gain  on  the  part  of  the  managers  of  the 
bank,  and  it  ought  to  be  peremptorily  forbidden  in  the  future. 

Under  this  section  the  banks  have  it  in  their  power  to  contract  the  cur- 
rency and  produce  financial  distress,  involving  every  interest  in  the  country 
and  embarrassing  the  operations  of  the  Government  itself,  whenever  they 
may  think  it  will  promote  their  special  interests  to  do  so.  If  they  do  not  like 
proposed  legislation  in  Congress  or  elsewhere;  if  they  are  opposed  to  the 
success  of  a  particular  political  party;  if  they  conclude  that  they  ought  to  be 
exempt  from  all  taxation,  State  and  Federal;  if  they  want  additional  privi- 
leges conferred  upon  them  in  respect  to  any  matter  connected  with  their 
business;  in  short,  if  their  opinions  and  interests  are  not  consulted  in  all 
cases  whatsoever,  they  can  resort  at  once  to  this  tremendous  power  over  the 
fortunes  of  the  people  and  thus  bring  the  timid  to  terms  and  ruin  all  who  re- 
fuse to  accede  to  their  demands.  A  plausible  pretext  can  always  be  found  or 
invented  for  the  exercise  of  such  a  power  as  this,  and  powerful  influences 
Can  always  be  brought  to  justify  and  sustain  it. 
1770 


48 

In  confirmation  of  the  threats  of  the  bank  power  many  years 
ago  through  the  New  York  press,  that  they  were  getting  the  ma- 
chinery in  order  by  which,  on  a  few  hours  notice,  they  could  act 
80  strongly  that  no  act  of  Congress  could  withstand  them  (which 
showed  to  my  mind  that  treason  was  lurking  close  to  the  star 
chamber  consultations  of  Wall  street) ,  and  in  confirmation  with 
Jefferson's  warning  concerning  such  bank  powers,  that  they  were 
more  dangerous  than  standing  armies,  and  in  general  accord  with 
what  has  long  been  pointed  out  by  those  of  us  who  are  Demo- 
cratic enough  to  want  bank  issues  suppressed  and  the  circulation 
restored  to  the  Government  where  it  belongs,  let  us  quote  the 
arraignment  that  Mr.  Carliale  makes  against  the  national  banks. 

Continuing  from  sentences  quoted  above,  he  says: 

The  two  Houses  of  Conjjress,  representing  the  aggregate  interests  of  fifty 
millions  of  people,  have,  after  mature  deliberation,  passed  a  bill  which  the  banks 
have  chosen  to  consider  obnoxious  to  them,  and  forthwith— within  thirteen 
days— they  have  contracted  the  currency  to  the  extent  of  $18,723,340  and  pre- 
cipitated a  crisis  which  would  have  lx?en  disastrous  to  the  country  had  it  not 
been  met  by  measures  which  they  had  no  power  to  prevent.  The  prompt  ac- 
tion of  the  Secretary  of  the  Treasury  in  purchasing  a  large  amount  of  bonds 
at  the  city  of  New  York,  and  the  course  of  the  Canadian  banks  in  throwing 
seven  or  eight  million  dollars  of  their  loanable  capital  on  the  market,  alone 
prevented  a  catastrophe  from  the  effects  of  which  we  might  not  have  entirely 
recovered  for  many  years. 

When  Secretary  McCulloch,  several  years  since,  in  pursuance  of  his  con- 
traction policy,  began  t<j  retire  and  cancel  legal-tender  notes  at  the  rate  of 
|4.n<)0.(KX)  per  month,  it  produced  such  consternation  in  business  circles  that 
Congress  was  forced  to  intervene  at  once  and  arrest  the  process  by  the  pas- 
sage of  a  joint  resolution;  but  now  we  have  seen  nearly  $19,00(1.000  of  circula- 
tion withdrawn  in  less  than  half  a  month,  not  by  the  Government,  but  by  in- 
stitutions in  the  management  of  which  the  Government  has  no  voice,  and  still 
gentlemen  here  insist  that  tlie  power  under  which  this  has  been  done,  and 
under  which  it  may  at  any  time  be  repeated,  shall  not  be  taken  away.  Why, 
sir,  the  whole  contraction  of  legal-tender  Treasury  notes  under  the  provis- 
ions of  the  resumption  act,  from  January  14, 1875.  to  May  31, 1878,  when  it  was 
prohibited  by  law,  was  only  $34,318,984,  not  twice  as  much  in  more  than  three 
years  as  the  bank  contraction  has  been  in  less  than  two  weeks. 

This  experience  warns  us  that  we  can  not  safely  permit  this  great  power  to 
remain  in  the  hands  of  these  institutions  imchecked  by  legal  restrictions.  It 
is  an  engine  of  destriiction  standing  in  the  very  narrowest  part  of  the  way  to 
permanent  industrial  and  commercial  prosperity  in  this  country;  for  there 
can  be  no  such  prosperity  anywhere  in  the  midst  of  sudden  and  enormous 
contractions  of  the  currency;  nor  will  prudent  and  experienced  business  men 
embark  in  large  and  expensive  enterprises  when  the  power  to  make  such  con- 
tractions is  held  by  private  and  interested  parties  who  acknowledge  no  re- 
straints except  public  sentiment  and  their  own  views  of  the  public  welfare. 

By  law  the  volume  of  legal-tender  notes  is  limited  to  $346,(i81.016,  while  un- 
der the  policy  of  the  Government  nearly  .$1.50.0(JO,000  in  gold  and  silver  coin 
are  permanently  withheld  from  circulation  and  hoai'ded  in  the  Treasury. 
Of  the  $4.^,OiXt.0OO  gold  coin  in  the  country  the  (Government  and  the  banks 
held,  on  the  1st  day  of  November  last,  $2.")4.U(J0,(M),  and  the  people  only  $200,- 
000,000.  The  circulation  of  State  banks  is  taxed  out  of  existence;  the  coinage 
1770 


49 

of  silver  is  limited  by  statute  to  $4,000,000  per  month;  and  so  it  appears  that 
by  statute  or  public  policy  every  form  of  currency  which  the  people  can  use 
in  the  transaction  of  their  business  is  restricted,  except  national-bank  notes. 
They  alone  are  perfectly  free  fi'oni  all  restrictions,  legal  or  otherwise,  and 
upon  them  the  people  are  compelled  to  rely  under  existing  circumstances 
for  the  additional  facilities  of  exchange  necessary  to  enable  them  to  carry  on 
their  gi'owing  industries  and  conduct  their  rapidly  increasing  commercial 
enterprises. 

On  another  occasion  it  will  be  remembered  how  strongly  Mr. 
Carlisle  has  insisted  that  there  has  been  a  conspiracy  between 
American  and  European  money  powers  to  force  the  gold  standard 
on  this  country  and  how  he  compares  the  evils  of  their  contrac- 
tion policy  to  those  produced  by  war,  pestilence,  and  famine  com- 
bined. 

NO  DEMOCRACY  IN  THIS  NATIONAL-BANK   SCHEME. 

Do  not  let  anyone  recklessly  say  that  I  am  attacking  the  hon- 
orable Secretary's  Democracy.  I  am  upholding  that  which  he 
strongly  upheld  some  dozen  years  ago,  and  would  uphold  true 
Democracy  everywhere,  but  I  deplore  and  would  oppose  his  Re- 
publicanism as  shown  in  his  recent  upholding  of  Republican  poli- 
cies and  practically  a  Republican  bank  system,  and  I  call  attention 
to  his  own  abandonment  of  Democratic  doctrine  and  his  own 
former  teaching  on  these  questions. 

This  present  pending  currency  bill  has  so  little  of  Democracy  in 
it  that  no  Democratic  Congress  should  accept  its  bank-issuing 
features. 

It  appears  to  my  humble  judgment  that  the  present  executive 
administration  has,  on  the  money  question,  abandoned  all  true 
Democracy,  the  platform  and  all,  as  I  understand  Democratic 
teaching  on  the  money  question,  and  this  will  go  far  toward  ex- 
plaining the  efforts  of  the  people  everywhere  to  reprove  the  Presi- 
dent and  Democratic  party  at  the  late  general  elections. 

This  bill  will  not  even  jilease  the  Republicans,  chiefly  because 
they  have  long  been  the  champions  of  the  national  banks  and 
do  not  want  to  losetheir  "occupation."  And  if  the  people  want 
national  banks  and  bonds  and  gold-standard  money  i^rices  they 
know  what  party  has  a  long-standing  record  in  favor  of  these 
things. 

It  will  not  in  that  case  be  the  Democratic  party.  Either  this 
triple-headed  scheme  of  bank  issues  and  bond  issues  and  gold- 
standard  money  must  perish  or  the  Democratic  party  will  perish. 

For  myself,  in  these  days  of  halting  I  would  still  cry  out."De- 
landa  est  Carthago "  to  the  gold  conspiracy.  And  if  I  mistake 
not,  the  pending  bill  is  already  beaten.  Democracy  shall  yet  move 
out  of  this  confusion  into  a  clear  field,  where  it  can  regain  its 
bearings. 

1770 i 


50 

The  English  people  cut  off  the  head  of  Charles  I  because  of  what 
thoy  believed  to  be  his  tjTanny,  and  they  tried  Cromwell.  All 
WL'nt  well  until  the  second  Cromwell  began  again  the  exercise  of 
tyranny,  from  which  they  had  sought  to  escape,  when  the  people 
rose  up  again  and  restoi*ed  the  royal  line  in  Charles  II,  saying, 
"If  we  must  have  a  tjTant,  let  us  have  a  legitimate  one." 

This  did  not  mean  that  the  people  loved  tyranny,  however. 

So  the  people  are  likely  to  say  to  the  Democracy  in  this  country 
if  they  adopt  the  Republican  tyrannies  of  turning  over  the  coun- 
try to  the  bank  and  bond  and  gold  conspirators,  "  We  would 
rather  have  the  legitimate  tyrant  in  power,  if  we  must  submit  to 
these  tjTannies;"  and  so  they  would  restore  the  Republican  party 
to  power  again. 

Here  is  a  clipping  from  Henry  Clews's  Financial  Review  of  Jan- 
uary 5, 1895,  in  which  we  can  see  the  purpose  of  the  money  power 
to  use  the  Democratic  party  for  the  banks,  bonds,  and  gold  mon- 
gers during  this  short  session,  if  possible,  and  then  cast  it  aside 
as  illegitimate  and  useless: 

All  that  is  really  desirable  for  the  present  short  session  to  do  is  to  pass  the 
railroad  pooling  bill  and  to  pass  a  bill  to  amend  the  law  which  authorizes  the 
issue  of  5  per  cent.  United  States  bonds  by  reducing  the  rate  of  interest  to  3 
per  cent,  and,  in  consideration  for  making  that  low  rate,  the  bonds  to  be  pay- 
able, both  principal  and  interest,  in  gold  coin.  If  this  is  done  it  would  meet 
the  present  emergency,  and  would  beyond  doubt  stop  the  export  of  gold  and 
the  present  drain  upon  the  Treasury  in  consequence.  Europe  would  take  an 
iinliniited  number  of  such  bonds  and  pay  a  handsome  premium  for  them,  and 
would  prefer  them  to  our  gold.  This  I  do  not  hesitate  to  assert,  as  I  know 
whereof  I  speak.  With  this  legislation,  together  with  the  appointment  of  a 
commission  by  President  Cleveland,  to  be  comprised  of  the  newly  elected 
members  of  Congress,  half  Republicans  and  half  Democrats,  to  formulate  a 
currency  plan  to  report  to  the  next  Congi-ess,  the  business  situation  would 
materially  change  for  the  better,  and  confidence  and  courage  would  revive 
and  thereby  immensely  stimulate  business  enterprise,  now  so  much  needed 
in  all  sections  of  the  country. 

SPECIFIC  PROVISIONS  IN  THE  CARLISLE  BILL. 

The  Carlisle  plan  provides  no  limit  to  the  expansion  and  pro- 
vides no  safeguards  against  contraction  of  currency. 

It  proiddes  that  banks  may  issue  notes  up  to  75  per  cent  of  their 
paid-up  capital  under  so-called  safeguards  for  the  ultimate  pay- 
ment of  their  notes.  There  is,  however,  no  safety  against  frauds 
in  jiermitting  banks  to  issue  money  on  a  deposit  of  less  than  the 
amount  circulated. 

There  is  no  limit  to  the  number  of  banks  that  may  be  organized 
or  the  capital  that  may  enter  into  the  banking  business.  Nor  is 
there  any  provision  compelling  any  banks  to  issue  any  certain 
amount  of  currency  or  to  keep  it  in  circulation  when  issued. 

In  other  words,  it  is  entirely  optional  with  banks  what  the  vol- 
1770 


51 

ume  of  currency  shall  be  or  how  far  expansion  or  contraction  of 
the  currency  may  be  carried. 

It  provides  no  means  of  current  Government  redemption,  nor 
compulsory  current  redemption  of  the  issued  notes  by  the  banks 
themselves  in  any  specified  kind  of  coin  or  money.  This  leaves  it 
optional  with  the  banks  to  redeem  in  any  legal-tender  money. 

And  this  again  makes  it  of  interest  to  banks,  while  gold  is  both 
scarce  and  dangerous  to  hold  (see  Hearings,  page  46),  to  retain  in 
their  possession  abundance  of  greenbacks  and  Treasury  notes  pre- 
venting, thus  far,  both  their  circulation  and  their  cancellation, 
and  yet  keeping  them  as  a  menace  to  the  Treasury  gold  reserve  as 
"  coin  "  redemption  is  now  construed. 

It  weakens  the  securities  for  depositors  in  note-issuing  banks, 
by  holding  all  assets  of  banks  and  liabilities  of  stockholders  under 
first  lien  to  secure  the  ultimate  redemption  of  the  notes  issued. 

It  contemplates  redemption  by  the  banks  of  all  bank  notes  in 
either  gold,  silver,  or  legal-tender  paper  of  the  United  States, 
with  an  opportunity  to  expand  the  volume  of  bank  paper  to  a 
dangerolis  degree,  while  the  volume  of  legal-tender  notes  may  be 
retired,  paid  by  surplus  revenue,  which  thus  lessens  the  means  of 
redemption. 

It  provides  for  a  possible  inflation  limited  only  by  the  capacity 
to  transform  wealth  of  this  country  into  bank  capital.  In  this  its 
advocates  excel  even  some  of  the  Populists  they  profess  to  condemn. 

It  discards  all  responsibility  as  to  keeping  the  paper  currency 
within  due  bounds  or  ratio  to  the  coin  that  shall  be  available  for 
coin  redemption. 

SOME  PERTINENT  QUESTIONS  FOB  THE  GOLDITES. 

It  may  be  said  by  the  advocates  of  this  bill  that  the  banks  are 
not  compelled  to  redeem  in  gold,  but  are  perfectly  free  to  redeem 
all  their  volume  of  notes,  whether  inflated  or  contracted,  in  silver 
or  in  greenbacks. 
N    Then  answer  me — 

First.  Would  we  be  on  a  silver  basis  or  a  greenback  basis,  or 
both,  or  neither? 

Second.  If  the  Government  is  by  this  system  relieved  from  the 
redemption  of  the  bank  notes  and  permits  their  perfect  and  con- 
stant redemption  in  silver  and  Government  legal  tenders,  what 
has  become  of  the  gold  standard? 

Third.  Will  not  all  of  Europe  and  foreign  holders  of  American 
securities  become,  according  to  your  former  teaching,  alarmed 
and  withdraw  gold  and  force  us  upon  tha^  dreaded  silver  basis? 

Fourth.  Worse  yet,  are  we  not  recogtiizing  that  dreadful "  fiat " 
greenback  as  a  money  of  ultimate  redemption? 
17Y0 


52 

Fifth.  Or,  if  we  are  still  to  be  held  upon  a  gold  basis,  does  not 
the  responsibility  clearly  rest  upon  the  Government  to  keep  up 
constant  and  current  gold  redemption  and  payments  at  the  Treas- 
ury and  be  held  to  the  ultimate  redemption  in  gold  of  an  uncon- 
ti-ollod  volume  of  money? 

Sixth.  Is  not  this  more  greatly  endangering  the  public  and  Gov- 
eriiment  credit  than  any  school  of  cranks  and  inflationists  ever 
proposed  before? 

It  appears  to  me,  therefore,  clear  that  the  adoption  of  this  bill 
and  plan  of  ciu-reucy  issues  would  at  once  place  everybody  on  a 
silver  and  greenback  basis  but  the  Government,  and  leaves  that 
still  helpless  to  defend  itself  against  the  continued  raids  upon  the 
gold  supply. 

This  leaves  the  Government  to  hold  the  bag,  or,  in  other  equally 
common  phrase,  perform  the  part  of  cat's-paw  to  relieve  the  banks 
from  any  responsibility  for  gold  redemption,  while  yet  the  banks 
would  get  away  with  all  the  profit  in  the  scheme. 

If  the  Government  is  to  be  completely  and  forever  kept  in  sub- 
jugation to  the  money  power  this  scheme  is  as  good  as  any — far 
better  than  some — but  if  the  Government  is  to  serve  the  people 
and  provide  an  adequate  volume  of  coin  and  its  own  legal- tender 
Treasury  notes,  which  are  ahvays  good  for  the  people,  and  by  this 
scheme,  itself  acknowledged  to  be  a  safe  and  perfect  redeemer  for 
all  bank  issues,  then  let  us  defeat  this  bill,  suppress  all  bank  cir- 
culation, as  the  founders  of  the  Democratic  party  insisted  upon, 
and  then  utilize  the  advancing  thought  and  progress  of  financial 
legislation  by  issuing  fiiU  legal-tender  Treasury  notes  in  safe  and 
adequate  volume,  paying  out  the  same  bj^  safe  and  reasonable  gra- 
dations in  the  current  and  ordinary  expenses  of  the  Government. 

THEN  WHAT  WILL  THE  BANKERS  DO? 

I  answer,  let  them  depart  in  peace  to  their  homes  and  stay  for 
a  time  behind  their  counters  and  do  a  proper  and  legitimate  bank- 
ing business  in  exchanges,  denosits,  and  loans,  the  proper  func- 
tions of  banking,  and  forever  hereafter  let  them  keep  their  hands 
off  from  the  issue  of  currency. 

It  is  the  nation's  place  and  duty  to  provide  the  proper  volume 
of  money  for  the  people,  and  thus  regulate  its  value  and  protect 
prices,  profits,  and  prosperity  in  the  industrial  avenues  of  life. 

It  is  the  banker's  business  to  deal  in  money  after  it  is  issued  or 
coined,  and  so  serve  the  people  in  the  business  of  exchange,  depos- 
its, and  discounts. 

Manj'  of  the  leading  financiers  and  bankers  of  both  Europe  and 
America  have  recognizecf  the  true  sphere  of  banking  and  protested 
against  banks  issuing  paper  currency.     They  know  there  can  be 

1770 


53 

no  safe  and  scientific  system  of  money  if  competing  banks  are  al- 
lowed its  issue. 

Let  me  quote  you  authorities,  for  I  would  have  you  understand 
that  in  this,  as  in  every  other  position  I  have  taken  on  the  money 
question,  I  am  supported  by  important  historic  facts  and  as  great 
authorities  as  can  be  found  on  other  propositions. 

In  the  British  commission  of  1857  for  parliamentary  investiga- 
tion into  banking  and  currency  questions  there  were  as  great  men 
on  that  commission  and  before  it  to  give  testimony  as  the  world 
then  knew  among  financiers. 

Gen.  A.J.  Warner,  president  of  the  American  Bimetallic  League, 
before  the  Committee  on  Banking  and  Currency,  gave  such  a  strong 
presentation  of  authorities  on  this  point  that  I  shall  quote  them 
from  his  testimony,  on  pages  243  and  244  of  Report  of  Hearings, 
together  with  his  own  introductory  remarks: 

STATEMENT  OP  MR.  A.  J.  WARNER,  OF  OHIO,  BEFORE  THE  HOUSE  COMMITTEE  ON 
BANKING  AND  CURRENCY. 

Mr.  Warner  said: 

Mr.  Chairman  and  gentlemen  of  the  committee:  I  can  not  begin  what  I  have 
to  say  in  any  better  way  than  to  read  a  single  sentence  from  the  speech  of 
Sir  Robert  Peel,  when  he  brought  before  Parliament  the  act  of  1844.    He  said: 

"  There  is  no  contract,  public  or  private— no  engagement,  national  or  indi- 
vidual, which  is  unaffected  by  it.  The  enterprises  of  commerce,  the  profits 
of  trade,  the  arrangements  made  in  all  domestic  relations  of  society,  the 
wages  of  labor,  pecuniary  transactions  of  the  highest  amounts  and  of  the 
lowest,  the  payment  of  the  national  debt,  the  provision  for  the  national  expend- 
iture, the  command  which  the  coin  of  the  smallest  denomination  has  over 
the  necesaries  of  life,  are  all  affected  by  the  decision  to  which  we  may  come 
on  that  great  question  which  I  am  about  to  submit  to  the  consideration  of  the 
committee." 

The  act  which  Sir  Robert  Peel  at  that  time  presented  to  the  Parliament  of 
Great  Britain  was  the  celebrated  act  of  1844,  the  purpose  of  which  was  to 
separate  the  issue  and  regulation  of  currency  from  the  business  of  banking 
and  to  place  the  control  over  currency  under  one  single  department,  to  be  reg- 
ulated in  accordance  with  established  principles  and  subject  in  every  par- 
ticular to  strict  regulations  of  law. 

Every  phase  of  the  question  was  discussed  over  and  over  again.  Parlia- 
mentary commission  after  commission  was  established  to  consider  every 
proposition  presented.  First  came  the  celebrated  bullion  report  of  1810,  then 
the  report  of  the  secret  commission  of  1819,  then  the  commission  of  1826,  that 
of  1840,  and  finally  of  18.57,  in  which  was  summed  up,  in  my  judgment,  the 
wisdom  of  the  entire  discussion,  and  to  the  discussion  which  then  took  place, 
so  far  as  I  know,  nothing  really  has  been  added  since  that  time.  I  believe 
that  the  general  conclusions  then  reached  have  been  accepted  by  all  writers 
of  distinction  from  that  day  down  to  this.  Of  course,  they  differ  somewhat 
as  to  the  proper  methods  of  regiilating  the  currency,  but  as  to  the  principles 
then  established  I  know  of  no  disagieement  among  competent  authorities, 
either  on  this  side  or  on  the  other  side  of  the  ocean. 

In  fact,  the  principles  of  currency  regulation  laid  down  in  the  report  of 
1840  have  since  been  adopted  in  the  main  by  every  civilized  nation  on  the 
•earth,  ths  United  States  being  the  only  country  now,  as  far  as  I  know,  among 
1770 


54 

nations  claiming  to  be  enlightened  that  proposes  to  reverse  the  conclusion- 
then  arrived  at,  principles  as  well  estaljlished  in  currency  as  the  law  of 
gravity  in  physics,  and  to  return  to  a  jirinciple  of  regulation  of  currency 
that  has  been  condemned  by  every  writer  of  distinction  for  fifty  years,  as 
well  a-s  l>y  the  experience  of  every  country  that  has  tried  it.  The  principle 
of  regulation,  as  laid  down  by  Sir  Robert  Peel  on  the  recommendation  of 
Lord  Overstone.  was  that  the  currency,  in  orde-  to  maintain  its  value,  must 
be  made  to  vary,  both  as  to  time  and  amount,  as  a  purely  metallic  currency 
would  vary;  that  in  no  other  way  could  it  be  kept  at  the  same  value  as  the 
standard. 

In  l(>7-t  Germany  adopted  substantially  the  same  principle  with  a  modifica- 
tion which  I  think  was  a  very  gi'eat  improvement.  Under  the  act  of  187.5  of 
the  Reichstag,  the  Imperial  Bank  of  Germany  was  established  and  a  unifica- 
tion of  the  currency  undertaken  by  withdrawing  the  currency  of  the  several 
states  of  the  federation  and  substituting  .for  it  the  currency  of  the  Empire. 
By  this  law  the  Imperial  Bank  of  Germany  is  permitted  to  issue  a  certain 
fixed  amount  of  uncovered  paper,  just  as  the  Bank  of  England  was  permitted 
to  continue  in  circulation  a  certain  fixed  amount  of  notes  without  security, 
and  so  are  the  country  banks,  but  that  amount  can  not  be  increased  as  to  the 
country  banks,  and  only  by  the  Bank  of  England  by  absorbing  a  part  of  the 
currency  surrendered  by  the  country  banks. 

The  Bank  of  England  is  permitted  to  issue  additional  currency  only  upon 
the  deposit  in  the  issue  department  of  coin  or  bullion  for  all  the  notes  issued. 
That  is  the  distinction  between  notes  covered  and  notes  uncovered.  The  Im- 
perial Bank  of  Germany  may  issue  notes  in  time  of  stress  or  panic  in  excess 
of  the  uncovered  notes,  upon  condition  of  paying  5  per  cent  interest  to  the 
State.  The  purpose  of  that  is  to  force  the  retirement  of  notes  as  soon  as  the 
exigency  that  called  them  out  is  over.  For  all  notes  issued  beyond  a  fixed 
amount  specified  in  the  act  coin  or  bullion  must  be  deposited.  That  principle 
in  the  main  governs  all  the  countries  of  Europe. 

The  Bank  of  France,  it  is  true,  is  governed  somewhat  differently,  but  it  is 
a  state  institution  with  officers  appointed  by  the  Government,  as  is  the  Bank 
of  Berlin,  the  chancellor  of  the  exchequer  being  president  of  the  bank.  So 
that  the  issue  and  regulation  of  currency  in  all  the  countries  of  Europe  is 
now  made  in  accordance  with  certain  fixed  principles. 

The  primary  object  of  the  act  of  1844, 1  say,  was  to  separate  the  banking 
business  from  the  duty  of  issuing  and  regulating  currency,  creating  money, 
and  on  that  question,  after  a  discussion  of  fifty  years,  there  was  almost  no 
division  of  opinion  in  England.  The  concurrent  judgment  of  nearly  every- 
body was  that  the  business  of  banking  is  necessarily  distinct  and  separate 
from  that  of  currency  creation,  and  that  the  two  can  not  be  blended  with- 
out doing  mischief.  On  that  point  I  beg  to  quote  from  a  few  of  the  authori- 
ties of  that  day.  and  I  will  not  take  up  much  time  in  doing  so,  but  I  am  sure 
It  will  not  be  without  interest. 

"  The  one  great  question  before  the  commission  of  1857  was  whether  the 
right  to  issue  circulating  notes  should  be  kept  under  the  control  of  the  Govern- 
ment, or  whether  the  banks  or  the  Bank  of  England  should  be  permitted  to 
issue  notes  to  circulate  as  money." 

On  page  328  of  this  report  Lord  Overstone,  who, as  SamuelJones  Loyd, was 
one  of  the  most  distinguished  and  successful  bankers  and  writers  on  the  cur- 
rency question,  and,  in  fact,  the  real  author  of  the  act  of  1844,  was  asked: 

''Do  you  consider  the  separation  of  the  issue  and  the  banking  departments 
of  the  Bank  of  England  to  be  founded  upon  the  principle  that  the  business  of 
issue  and  the  business  of  banking  are  in  their  nature  distinct? 

"A.  L'ndoubtedly ;  it  is  impossible  to  entertain  any  other  view  of  the  matter. " 
1770 


55 

Further  on  in  his  testimony  he  says:  "  I  certainly  think  it  quite  essential 
that  the  issue  of  paper  money  should  be  kept  entirely  separate  and  distinct 
from  everything  connected  with  the  banking  business." 

Again,  on  page  338:  "  The  supply  of  the  current  coin— that  is,  the  money  of 
the  realm— ought  to  be  entirely  separated  from  the  banking  business,  which 
is  simply  trading  in  money,  borrowing  at  a  lower  rate  and  lending  at  a 
higher  rate.  *  *  *  Notes  and  certificates  oiight  to  be  issued  as  the  money, 
whether  copper,  silver,  or  gold  is  coined,  under  strict  provisions  of  law,  and 
by  an  authority,  such  as  the  mint,  established  by  law  and  subject  to  stiict 
regulations  laid  down  in  that  law." 

And  again:  "The  sole  privilege  of  coining  money,  whether  copper, silver, 
gold,  or  paper,  ought  to  be  vested  in  one  institution,  established  for  that  ex- 
clusive purpose  and  subject  to  strict  regulations  of  law;  no  share  of  such  priv- 
ilege ought  to  be  conceded  in  any  form  to  banks  or  to  private  individuals." 

And  again,  ou  page  329,  he  says: 

"  Perfect  freedom  of  competition  should  be  established  in  the  business  of 
banking,  correctly  understood,  and  effectually  distinguished  from  the  func- 
tions of  coinage  or  from  that  of  issuing  paper  tokens  or  representatives  of 
coin— that  is,  bank  notes,  which,  in  fact,  is  coining  under  a  form  peculiarly 
susceptible  of  abuse — because  the  undue  issue  of  paper  notes  is  not  resti'icted 
by  that  intrinsic  value  which  effectually  regulates  the  issue  of  metallic 
money."  Loi'd  Over  stone  then  quotes  from  Daniel  Webster,  I  think  from 
his  subtreasury  speech  of  1838,  as  follows:  "  The  circulation  of  paper  tends 
to  displace  coin;  it  may  banish  it  altogether.  At  this  very  moment  it  has 
banished  it."  Asking  the  committee  to  mark  well  that  fact,  he  says:  "A  dis 
tinct  statement  by  so  great  an  authority  of  that  as  "Webster,  that  the  coin  of 
the  United  States  has  been  banished  entirely  by  paper  money,  by  currency 
payable  to  the  bearer  on  demand  and  issued  in  obedience  to  what  was  deemed 
to  be  the  wants  of  the  public." 

He  continues  then  his  quotation  from  Webster,  as  follows: 

"  If  others  may  drive  out  the  coin  and  fill  the  country  with  paper  which 
does  not  represent  coin,  of  what  use  is  that  exclusive  power  over  coins  and 
coinage  which  is  given  to  Congress  by  the  Constitution?  Whatever  paper  is 
to  circulate  as  subsidiary  coin,  or  as  performing  in  a  greater  or  less  degree 
the  functions  of  coin,  its  regulation  naturally  belongs  to  the  hands  which 
hold  the  power  over  coinage.  This  is  an  admitted  maxim  by  all  writers;  it 
has  been  admitted  and  acted  upon  on  all  necessary  occasions  by  our  own  Gov- 
ernment throughout  its  whole  history." 

He  then  quotes  Tooke  as  saying : 

"The  privilege  of  issung  paper  money  is  a  delegation  of  that  which  is  uni- 
versally considered  as  a  privilege  residing  in  the  State." 

Mr.  George  Ward  Norman,  so  long  connected  with  the  Bank  of  England, 
referring  in  his  testimony  before  the  commission  of  1857  to  the  bank  act  of 
1844,  said: 

"I  conceive  the  ground  of  the  act  to  have  been  that  the  issue  of  paper  money 
is  a  perfectly  distinct  operation  from  the  ordinary  business  of  banking,  and 
that  you  can  not  mix  up  together  the  issue  of  paper  money  and  ordinary  bank- 
ing business  without  doing  mischief." 

Again,  on  the  same  page,  373,  he  says: 

"I  consider  bank  notes  as  money,  and  I  think  that  you  do  mischief  when 
you  place  the  issue  of  money  in  the  hands  of  persons  who  carry  on  ordinai'y 
banking  business.  *  *  *  i  consider  that  the  issue  of  money  should  be  regu- 
lated by  the  State,  and  when  the  money  is  issued  then  that  bankers  shoiild 
be  allowed  to  deal  with  it  as  they  pleased,  *  *  *  the  principle  of  competi- 
tion can  not  be  introduced  into  the  issue  of  paper  money  without  doing  mis- 
chief." 
1770 


56 

Apain,  on  page  276,  he  says; 

"A  bank  lias  to  deal  with  the  money  of  the  country  which  exists,  but  it  ha^ 
properly  notliing  to  ao  with  the  issue  of  money." 

Ak'xander  Hamilton,  the  younger,  said,  referring  to  the  old  State  banks: 

"  There  is  now  no  check  to  the  creation  of  these  money  mints;  anybody  and 
everybody,  with  or  without  character,  has  a  right  to  enter  the  field  of  com- 
petition. *  *  *  Thesuperiutendence  of  a  power  of  such  immense  and  vital 
consequence  to  the  integi-ity,  stability,  and  permanent  interests  of  the  public 
as  that  of  money  making  ought  not,  in  the  very  nature  of  its  operation,  to  be 
legislatively  lodged  in  the  hands  of  individuals." 

Mr.  Henueusox.  Do  you  know  when  he  said  that? 

Mr.  Wakneh.  I  think  in  1839.    It  was  immediately  after  the  panic  of  1837. 

The  value  of  no  man's  property,  much  less  that  of  a  commtinity,  should  be 
placed  at  the  capricious  will  of  private  cupidity  and  speculation. 

1  quote  again  from  one  of  Webster's  subtreasury  speeches,  in  which  he 
says: 

"Whenever  paper  is  to  circulate  as  subsidiary  to  coin  or  as  performing  in  a 
greater  or  less  degree  the  functions  of  coin,  its  regulation  naturally  belongs 
to  the  hands  that  held  the  power  over  the  coinage." 

SO.ME  objections  TO  THE  CARLISLE  BILL. 

Section  1  of  the  substitute  bill  which  the  committee  favors 
carefully  leaves  the  present  national-bank  acts  in  force  except  so 
much  as  requires  the  deposit  of  United  States  bonds. 

Section  2  states  the  conditions  on  which  national  banks  may 
issue  currency  under  this  bill. 

Amount  to  each  bank  is  limited  to  75  per  cent  of  its  capital. 
Thirty  per  cent  of  amount  of  circulation  must  be  deposited  with 
the  United  States  Treasurer  in  United  States  notes  or  Treasury 
notes,  thus  locking  up  as  against  the  people,  but  not  as  against 
the  banks,  the  legal-tender  paper  currency. 

Banks  that  so  desire  can  have  their  notes  on  a  gold  basis  by 
having  their  notes  made  payable  in  gold  coin. 

Thirty  per  cent  deposit  on  the  75  per  cent  for  circ  lation  makes 
the  guaranty  fund  equal  to  22+  per  cent  on  the  entire  capital.  So 
bj'  putting  down  22^  per  cent  the  bankers  can  take  up  75  per  cent, 
a  gain  of  52^  per  cent  added  to  their  working  capital  for  which 
they  have  paid  nothing  to  either  the  Government  or  the  people. 

This  is  "  richness  "  as  a  scheme  for  getting  rich. 

Worse  than  this — it  is  a  temptation  to  the  fraud  of  organizing 
diuiimy  banks  on  dummy  cai)ital,  as  the  gentleman  from  Ohio 
[Mr.  Johnson]  has  this  day  so  ably  pointed  out  in  his  challenge 
to  the  advocates  of  the  bill  to  show  why  it  may  not  be  done. 

I  not  only  indorse  the  position  of  my  friend  from  Ohio,  but  would 
point  out  to  him  and  to  this  House  that  all  schemes  for  issuing 
bank  notes  on  assets  or  property  of  any  kind  deposited  as  secur- 
ity in  less  amount  than  100  per  cent  of  the  circulation  allowed  the 
banks  is  vicious  in  principle  and  permits  fraud  to  the  degree  of 
the  difference  between  the  deposit  and  circulation.     If,  therefore, 

1770 


57 

any  plan  is  proposed  that  requires  a  deposit  of  less  than  the  total 
amount  of  the  bank  notes  issued  for  circulation,  then  his  argu- 
ment of  opportunity  for  fraud  under  this  bill  will  apply  to  all 
such  plans  as  well  as  to  this  one. 

But  if  the  deposit  of  100  per  cent  is  required  for  protection 
against  the  possibility  of  fraud,  then  the  banker  will  not  favor  such 
plan,  for  he  may  as  well  loan  out  the  money  he  deposits,  as  the 
amount  is  the  same. 

But  if  the  bank  syndicate  would  deposit  100  per  cent  in  Govern- 
ment legal-tender  paper  money  instead  of  30  per  cent  only,  as  this 
bill  requires,  although  this  would  remedy  the  opportunity  for 
fraud,  yet  a  new  question  arises. 

What  reason  can  be  returned  to  the  people  who  have  given  us 
commissions  to  represent  them  on  this  floor  if  we  favor  any  scheme 
of  banking  which  simply  locks  up  one  kind  of  paper  money,  or  de- 
stroys it,  so  that  an  inferior  nonlegal-tender  paper  money  may  issue 
in  place  of  the  better  kind?  Can  you  find  in  all  history  of  finance 
a  more  foolish  legislative  provision  than  that? 

We  can  readily  see  that  if  jow  give  the  banks  a  chance  to  put 
down  $30  in  paper  money  and  take  up  and  walk  away  with  $75  in 
other  paper  money  that  they  may  use  for  an  indefinite  length  of 
time  it  will  help  the  bankers,  but  it  is  not  so  clear  to  others  than 
bankers  just  where  the  people  come  in  for  any  benefits.  They 
lose  from  cu-culation  the  better  kind  of  paper  money  and  get  the 
elasticity  game  worked  upon  them  besides. 

It  is  also  well  to  point  out,  that  owing  to  the  limited  amount  of 
the  two  kinds  of  paper  money  to  be  deposited  and  the  very  large 
amount  that  may  come  forward  as  banking  capital  to  get  the  ben- 
efit of  the  30  to  75  per  cent  exchange,  there  is  very  great  probabil- 
ity of  the  older  banks  and  those  in  the  money  centers  getting  a 
corner  on  the  greenback  and  Treasury  note  supply  necessary  for 
deposit  of  organizing  banks,  and  forcing  these  notes  to  a  premium. 

In  the  bond-deposit  system,  as  at  present  existing,  the  banks  pay 
1  per  cent  tax  or  interest  and  receive  90  per  cent  in  circulating 
notes. 

In  this  Carlisle  bill,  on  a  tax  of  only  one-half  per  cent  per  year, 
they  receive  back  300  per  cent  on  their  deposit  investment. 

Even  this  one-half  per  cent  tax  per  year  is  not  for  the  benefit  of 
the  Grovernment,  but  it  goes  into  a  fund  to  pay  off  the  debts  or 
notes  of  failed  banks,  and  it  will  take  10  years'  time  in  which  to 
accumulate  5  per  cent. 

NOT  FAIR  TOWARD  THE  DEPOSITORS. 

Depositors  under  this  and  all  similar  plans  are  left  out  in  the 
cold,  to  say  so.  in  case  of  failed  banks,  for  both  assets  and  the  liabil- 
1770 


58 

itifs  of  stockholders  are  practically  mortgaged  to  the  note  holders, 
and  ai-e  not  likely  to  bring  the  depositor  any  relief,  even  though 
his  own  deposits  may  have  been  used  a  few  days  before  failure  in 
a  scheme  to  get  out  circulating  notes  for  loan  to  some  accomplice 
who,  by  this  trick,  can  come  in  ahead  of  the  depositor. 

In  estimating  security  for  the  people  we  must  keep  in  mind  that 
all  of  these  bank  plans  provide  only  for  the  safety  of  note  holders. 

This  protects  the  banks  who  have  the  notes  and  circulation  on 
deposit. 

But  no  security  is  offered  for  depositors.  The  banks  offer  no 
safety  plan  whatever  for  the  people  who  deposit  money  with  them. 

Carlisle  says  (and  correctly)  that  the  deposit  of  money  with  a 
bank  is  iDurely  a  voluntary  and  private  transaction. 

I  say  that  the  issuance  of  a  noulegal-tender  bank  note  and  the 
taking  of  it  by  any  man  is  also  a  voluntary  matter,  the  note  not 
being  legal  tender.  But  it  should  not  at  the  whim  of  a  banker  be 
allowed  to  circulate  as  money.  The  Government  alone  should 
control  the  issuance  of  money  and  control  its  volume. 

It  has  been  well  pointed  out  by  Mr.  George  J.  E.  Mayer,  who  has 
given  much  attention  to  this  question  of  the  rights  of  depositors 
to  better  security,  that  from  the  very  lack  of  security  for  deposi- 
tors more  banks  fail  by  runs  upon  them  by  the  unsecured  deposi- 
tors, and  more  money  is  kept  hoarded  away  and  held  out  of  cir- 
culation. 

Since  90  per  cent  of  all  current  business  transactions  are  said  to 
be  transacted  through  banks  by  means  of  deposits,  we  should  give 
more  attention  to  the  safety  of  the  depositors.  This,  by  bulk,  as 
well  as  for  other  reasons,  is  five  to  ten  times  as  important  as  se- 
curity for  bank  notes. 

In  section  5  of  the  substitute  bill  the  provision  is  made  for  6  per 
cent  interest  on  all  notes  of  failed  banks  not  redeemed  on  pre- 
sentation to  the  Treasurer  or  assistant  until  thirty  days  after 
notice  has  been  given  of  readiness  to  pay  them,  and  such  notes  are 
a  first  lien  on  the  safety  fund. 

As  our  Western  men  would  say,  this  is  a  "pay  streak."  The 
rate  of  interest  being  so  much  better  than  United  States  3  per  cent 
or  4  per  cent  bonds,  it  will  entitle  such  notes  to  a  good  premium 
over  the  notes  of  all  other  banks. 

Section  6  puts  the  Government  into  the  business  of  making  in- 
vestments of  the  safety  fund,  not  for  the  benefit  of  the  Treasury, 
but  all  for  the  banks.  There  is  nothing  in  this  bill  anywhere  that 
gives  any  benefits  or  compensation  to  the  Government  or  the  peo- 
ple.    It  is  all  for  the  banks. 

Section  10  and  forward  provides,  under  certain  conditions  being 
complied  with,  that  the  State  banks  may  also  take  out  circulation 

1771) 


59 

in  same  proportions  to  assets  and  deposits  as  in  the  case  of  tlie 
national  banks. 

Here,  then,  we  have  concurrent  jurisdiction  by  the  State  and  the 
General  Government  over  some  points  regarding  State-bank  paper 
money  and  separate  jurisdiction  over  other  features. 

This  will  give  us  also  two  kinds  of  bank  paper  at  least,  and  proba- 
bilities of  complications  between  State  and  Federal  jurisdiction. 

The  national-bank  circulation  to  be  issued  remains  apparently 
legal  tender  for  payment  of  all  taxes  to  the  Federal  Government 
excej^t  duties  on  imports,  this  provision  of  the  present  law  remain- 
ing as  at  present.  This  will  make  them,  by  their  receivability  by 
the  Government  for  such  extensive  revenues,  so  secure  that  they 
will  have  great  advantages  over  all  State  issues.  In  same  section 
provision  is  made  for  the  Secretary  to  give  a  sort  of  certificate  of 
good  character  to  State  banks,  which  may  lead  the  public  to  be 
satisfied  with.  State  issues. 

THE  CARLISLE  PLAN  BETTER  THAN  THE  PRESENT  LAW. 

I  would  not  feel  that  I  had  done  complete  justice  in  my  treat- 
ment of  the  Carlisle  plan  of  currency  legislation  after  pointing 
out  its  many  faults  if  I  did  not  also  point  out  what  I  believe  are 
its  advantages  over  the  present  national  banking  law  and  the  pro- 
posed Baltimore  plan,  which  is  fairly  representative  of  the  prefer- 
ences of  the  associated  national  banks. 

To  me  they  are  all  wi'ong  in  principle,  as  any  system  must  be 
that  permits  the  issuance  of  circulating  notes  and  control  or  inter- 
ference of  the  aggregate  volume  of  money  to  pass  into  the  hands 
of  banking  corporations. 

They  are  all  of  them  more  or  less  founded  on  the  idea  that  our 
Government  must  in  all  financial  legislation  keep  constantly  in 
view  the  regulation  and  issuance  of  currency  in  the  interest  of 
those  who  use  currency  for  profit  making  on  loans. 

Instead  of  viewing  money  principally  as  an  investment  or  form 
of  property  to  hire  out  and  loan  to  our  70,000,000  people  for  the 
profit  of  those  who  are  in  general  the  wealthy  classes,  the  dominant 
idea  ought  to  be  the  issuance  and  regulation  of  currency  in  the 
interest  of  investors  and  for  the  exchanging  of  all  other  forms  of 
property  so  as  to  render  the  manufacturing  and  productive  work 
of  our  people  profitable. 

"WE  SHOULD  CREATE  MONEY  TO    MAKE  INVESTMENTS    PROFITABLE  RATHER 
THAN  FOR  LOANABLE  PURPOSES. 

Money  for  profitable  investment  in  other  forms  of  property 
rather  than  money  for  loans  should  be  uppermost  in  the  mind  of 
Congress. 

Money  as  an  instrument  for  the  profitable  exercise  of  the  pro- 
ductive energies  of  our  people  and  the  maintenance  of  equity  in 

1770 


GO 

eettlement  of  all  time  contracts  is  the  proper  idea,  so  that  money 
shall  be  subsei'vient  as  a  means  of  exchange  and  payment  to  tho 
needs  of  our  people  engaged  in  all  the  varied  industries  of  this  ad- 
vanced and  progressive  age  and  country  rather  than  issue  and 
regulate  money  for  the  sole  profit  of  money  dealers  and  money 
loaning. 

Money  for  investment,  exchange,  and  equitable  payments  means 
money  as  a  servant,  but  money  issued  by  and  regulated  in  the 
sole  interest  of  money  dealers  moans  money  as  master  and  all 
other  forms  of  property  in  subjection. 

That  party  is  the  party  of  the  people  and  truly  democratic  that 
will  take  the  people's  side  of  this  question  and  issue  and  control  all 
of  oiir  money  in  the  interest  of  property  and  the  general  indus- 
tries. 

If,  however,  the  people  must  be  subject  to  bank  control  and 
bank  issuance  of  the  circulating  medium,  then  that  System  which 
prevents  centralization  and  monopoly  in  control  of  currency  is 
best. 

It  is  precisely  in  this  matter  that  the  Carlisle  plan  is  superior 
to  and  better  for  the  people  than  all  the  other  plans  for  bank  issues. 
It  starts  out  in  an  effort  to  make  the  centralized  power  of  the 
present  associated  banks  compromise  or  yield  a  part  of  the  profits 
and  control  of  ciirrency  volume  to  the  States  and  State  banking 
institutions.  It  introduces  a  new  and  strong  competitor  in  the 
field  of  banking  and  note  issuance,  and  one  that  will,  to  some 
degree,  permit  the  people  of  every  State  jurisdiction  to  protect 
themselves  against  money  contractions  in  the  interests  of  and  by 
the  national  bank  association.  It  therefore  threatens  to  break 
the  intolerable  monopoly  of  Wall  street  in  financial  matters. 

Not  only  this,  it  permits  people  of  smaller  means  to  enter  the 
business  of  issuing  their  credit  notes  to  circulate  as  money  and 
become  participants  of  the  showers  of  financial  blessings  sent  forth 
by  the  Government  for  the  profit  of  the  banking  fraternity,  for  the 
restrictions  of  $50,000  as  the  minimum  for  State  banks  and  the 
ownership  or  use  of  United  States  bonds  for  deposit  as  security 
for  all  banks  are  both  left  out  of  the  Carlisle  plan.  So  much  for 
the  antimonopoly  and  free-banking  features  of  the  Carlisle  plan. 
But  for  these  reasons  the  strong  and  wealthy  bankers  of  Wall 
street  and  other  allied  money  centers  will  sooner  or  later,  as  I  have 
believed,  sound  a  note  of  warning  to  their  cuckoos  and  "  make 
themselves  heard  in  tones  of  imperative  urgency"  against  the 
adoption  of  the  Carlisle  plan. 

WALL,  STHEET'S  IMPERATIVE  DEMANDS. 

Again,  the  Carlisle  plan  does  not  sufiSciently  insure  the  retire- 
ment and  destruction  of  all  the  Government  legal-tender  money 
and  the  issuance  of  bonds  to  please  the  centralized  money  power. 

1770 


61 

Hear  them  throngli  one  of  their  favorite  spokesmen,  Henry- 
Clews,  in  the  Financial  Review  of  December  22,  189-4.  In  speak- 
ing of  the  Carlisle  bill  he  says: 

Among  the  clauses  deemed  objectionable  is  the  requirement  that  the  banks 
of  issue  shall  deposit  legal  tenders  at  the  Treasury  to  the  amoimt  of  30  per 
cent  of  their  circiilation ;  which  would  largely  restrict  the  net  earnings  from 
the  notes,  and  so  far  lessen  the  inducement  for  the  banks  to  avail  themselves 
of  their  privilege  of  issuing;  besides  which  it  might  keep  a  very  large  amount 
of  legal  tenders  in  existence  after  the  remainder  had  been  retired.    *    *    * 

The  great  and  universal  objection,  however,  is  that  Mr.  Carlisle 
fails  to  make — 

any  adequate  provision  for  carrying  out  the  main  feature  of  his  plan,  the  re- 
tirement of  the  five  hundred  millions  of  legal-tender  notes.  He  asks  for  au- 
thority to  use  for  that  purpose  any  money  in  the  Treasury  not  otherwise  ap- 
propriated, but  does  not  mention  authorization  to  borrow  money  for  these 
vast  liquidations.  *  *  *  The  men  of  intelligence  and  the  organizations  rep- 
resenting our  great  commercial  and  financial  interests  must  make  themselves 
heard  in  tones  of  imperative  urgency. 

So,  now,  ye  Republican  jumping  jacks  operated  by  a  Wall 
street  string,  and  ye  Democratic  cuckoos,  ever  anxious  to  call 
out  the  plausible  sophistries  of  the  money  power,  take  warning 
in  time.  If  you  mean  still  to  serve  the  money  lords  you  would 
better  begin  now  to  liedge  against  this  bill.  If  you  resist,  you 
may  hear  those  "  tones  of  imperative  urgency." 

Retirement  and  destruction  of  all  Government  legal  tender  and 
the  authorized  issuance  of  United  States  bonds  are  imperatively 
demanded  by  Wall  street  and  a  lessening  of  the  30  per  cent  de- 
posit requisite  as  a  condition  for  the  issuance  of  notes  is  very 
urgently  requested,  for  it  ' '  restricts  the  net  earnings  from  the 
notes,"  and  remember  always  that  the  banks,  in  the  language  of 
a  character  in  the  Hoosier  Schoolmaster,  desire  "  while  they're 
gittin'  to  get  a  plenty,"  and  it  ought  to  be  clear  to  all  of  their 
Congressional  servants  that  if  they  are  required  to  put  down  ac- 
tually of  their  own  money  $30  on  deposit  for  every  time  they  loan 
$100  in  their  own  circulating  notes,  they  can  not  make  as  much 
off  the  people  as  if  they  were  only  required  to  put  down  $5  or  $10 
for  every  $100  taken  up  and  used  in  loaning. 

If  now  the  national-bank  interests  can  secure  large  additional 
bond  issues  and  overcome  tlie  present  premium  on  bonds,  and 
can  obtain  100  per  cent  on  their  deposit  instead  of  90  per  cent,  as 
now,  and  secure  repeal  of  the  1  per  cent  tax  on  their  circulation, 
they  can  make  more  profit,  getting  interest  on  capital  invested  in 
bonds  and  at  the  same  time  getting  interest  on-same  capital  loaned 
out  in  notes  to  the  people,  as  anyone  can  easily  see,  but  we,  in 
behalf  of  the  people,  must  remember  that  all  the  additional  profits 
they  thus  secure,  as  comi^ared  to  the  Carlisle  plan,  are  just  so 
much  to  the  disadvantage  of  the  people. 

1770 


()2 

Every  dollar  of  profit  to  banking  corporations  on  issuance  of 
circulating  notes  must  come  out  of  the  people  who  use  that  money, 
ami  is  that  much  of  a  burden  on  productive  industry. 

HOLDING  TOO  MUCH  OUTSIDE  "  RESEKVES"  IN  NEW  YORK. 

Tliere  is  one  feature  of  the  present  banking  system  that  is  gen- 
erally overlooked,  and  yet  of  more  importance  than  gentlemen 
usually  suppose.  I  refer  to  the  provisions  of  the  law  favoring  re- 
serve cities,  and  especially  New  York.  Banks  in  other  cities  are 
allowed  to  keep  part  of  their  reserves  in  New  York  on  deposit,  sub- 
ject to  check,  and  yet  coimt  it  in  their  legal  reserves.  This  results  in 
vast  accumulations  of  outside  money  in  New  York,  and  tempts  the 
banks  in  that  city  to  loan  a  large  part  of  it  at  any  rate  of  interest 
they  can  get.  This  increasing  of  the  supply  in  New  York  tending 
at  the  same  time  to  decrease  it  elsewhere  makes  it  impossible  to 
obtain  money  in  other  places  at  such  low  rates  as  in  New  York. 

On  the  evidence  of  more  than  one  banker  before  the  Committee 
on  Banking  and  Currency  recently  it  was  shown  that  interest  for 
the  last  year  on  call  loans  and  short  notice  loans  has  been  from  1 
to  1^  per  cent  per  annum. 

How  can  business  men  and  industries  in  other  parts  of  the  coun- 
try, where  they  must  pay  from  four  to  eight  times  as  much  for 
money,  compete  successfully  with  business  in  New  York? 

This  special  favoritism  for  New  York  in  the  law  ought,  in  fair 
play,  to  be  repealed.  It  would  result  in  a  wider  and  better  diffu- 
sion of  whatever  volume  of  currency  may  exist. 

BANKING  IS  SUFFICIENTLY  PKOFITABLE  WITHOUT  ISSUE  PRIVILEGES. 

Mr.  Chairman,  remembering  what  great  advantages  the  associ- 
ate banks  in  the  money  centers  have  already,  and  how  little  they 
have  in  common  with  banking  in  the  interior  and  on  the  frontier, 
I  hold  that  we  can  not,  for  these  reasons,  follow  their  ideas  and 
advice  on  financial  matters,  even  if  their  desire  for  selfish  advan- 
tage were  not  to  be  considered. 

And  I  would  say,  too,  that  the  business  of  banking  independent 
of  issuing  notes  for  circulation  is  already  sufficiently  profitable, 
and  especially  in  New  York,  from  which  city  so  much  financial 
wisdom  has  been  poured  out  upon  Congress  from  time  to  time  for 
many  years. 

Let  me  introduce  the  testimony  of  Mr.  George  Q-.  Williams, 
president  of  the  Chemical  National  Bank,  New  York,  one  of  the 
gi-eatest  banks  in  the  country  (page  'SO'6  and  308  of  Hearings,  Dec. 
15,1894): 

Mr.  Warner.  So  that  the  capital  of  your  bank  now  represents  how  many 
millions  of  dollars? 

Mr.  "Williams.  Our  capital  is  $300,000  and  our  surplus  is  about  $7,000,000. 

Mr.  "Warner.  Your  stock  is  worth  about  $4,3fXJ  a  share? 
1770 


03 

Mr.  "Williams.  Yes,  sir;  it  sells  for  that.    Itsells  for  more  tlian  it  is  worth. 

Mr.  Warner.  Forty-three  times  as  much  as  its  par.  What  is  the  amount 
of  your  bond  deposit"? 

Mr.  Williams.  The  Chemical  Bank  has  never  taken  out  any  circulation 
whatever.  Our  bond  deposit  is  $50,000;  but  we  have  never  circulated  any 
notes. 

Mr.  Warner.  What  is  the  reason,  may  I  ask,  that  you  have  not  taken  out 
circulation? 

Mr.  Williams.  We  were  under  the  State-bank  system,  and  issued  circu- 
lating notes  up  to  the  breaking  out  of  the  war,  and  at  that  time  we  had  about 
S;^(lO,0(X)  of  notes  in  circulation,  and  we  redeemed  every  one  of  them  in  gold— 
and  we  did  not  care,  as  a  matter  of  pride,  and  a  little  profit  in  it,  too;  but  we 
did  not  care,  as  a  matter  of  pride,  to  issue  notes  which  could  not  be  redeemed 
in  gold. 

The  Chairman.  Mr.  Williams,  some  members  of  the  committee  desire  to 
understand  exactly  the  condition  of  your  bank.  What  did  you  state  the  cap- 
ital was? 

Mr.  Williams.  Three  hundred  thousand  dollars. 

The  Chairman.  And  the  surplus? 

Mr.  Williams.  The  surplus  and  undivided  profits  are  about  $7,000,000.  The 
surplus  is  $6,000,000  and  the  undivided  profits  a  little  over  a  million  dollars, 
making  a  little  over  $7,000,000  of  surplus  and  undivided  profits. 

The  Chairman.  And  how  much  deposits? 

Mr.  Williams.  Thirty  million  dollars. 

The  Chairman.  What  dividend  do  you  pay  per  annum  on  your  stock? 

Mr.  Williams.  We  pay  now  150  per  cent  per  annum. 

41  il;  41  41  lie  «  « 

The  Chairman.  You  stated  the  dividend  last  year  was  150  per  cent. 

Mr.  Williams.  Yes,  sir. 

The  Chairman.  What  were  the  undivided  profits  of  that  year? 

Mr.  Williams.  Well,  I  have  not  it  in  mind;  but  owing  to  the  panic  our 
profits  last  year  were  not  as  large  as  usual.  Usually  we  expect  to  add  to  our 
surplus  100  per  cent  besides  the  dividend  we  pay  of  150  per  cent. 

The  Chairman.  That  is  $300,000  a  year? 

Mr.  Williams.  Yes,  sir. 

The  Chairman.  And  a  dividend  of  150  per  cent  besides? 

Mr.  Williams.  Yes,  sir. 

We  see,  then,  that  without  circulation  banking  is  sufficiently 
profitable.  Here  a  great  bank  of  New  York  is  testifying  that  its 
stock  is  selling  at  4,200  per  cent  above  par,  and  we  see  that  in  a  few 
years,  on  a  capital  of  $300,000,  besides  paying  enormous  amounts 
in  dividends,  it  has  accumulated  a  surplus  of  about  twenty-four 
times  its  capital.  And  this  bank  does  not  take  out  circulating 
notes.  How  long  will  it  take  4,000  to  6,000  banks  like  this  to  eat 
up  the  wealth  of  America? 

brief  inventory  of  CARLISLE  PLAN. 

We  have  seen  how  fast  even  the  present  system  of  banks  is  de- 
vouring the  substance  of  the  people.  Let  us  make  no  further  con- 
cessions of  any  kind. 

1770 


04 

The  measure  before  its,  however  together  with  the  substitute. 
tliat  the  counnittee  propose  to  otter,  aj-e  already  practically  dead. 

Sibley's  appeal,  Tom  Johnson "s  thrusts,  and  Bland's  expose — 
the  work  of  these  honorable  gentlemen  to-day  has  been  too  much 
for  the  survival  of  the  bill  under  discussion. 

Let  us,  however,  make  a  brief  inventory: 

Democratic  doctrine  is  not  in  it. 

The  people's  interests  are  endangered  by  it. 

Equity  of  payment  is  endangered  by  it. 

Party  exigencies  are  against  it. 

Drainage  of  gold  is  not  stopped  by  it. 

Cancellation  of  greenbacks  (the  desire  of  banks)  is  not  compnl- 
sory  in  it. 

Locking  up  of  greenbacks  is  made  certain  by  it. 

Rights  of  depositors  are  endangered  by  it. 

The  needful  supply  of  legal  tenders  is  taken  from  the  people 
by  it. 

Government  receivability  of  national-bank  notes  is  retained 
in  it. 

This  receivability  of  State-bank  notes  is  not  in  it. 

Double  jurisdiction  over  note  issues  is  found  in  it. 

Two  kinds  of  money  are  added  to  our  present  complexity  by  it. 
Power  of  banks  over  prices,  profits,  and  prosperity  is  in  it.  It 
threatens  first  undue  expansion;  then  final  collapse.  It  makes  no 
provision  for  free  coinage  or  true  currency  reform. 

Let  us  hope  that  it  is  dead,  and  that  all  other  plans  for  the  ex- 
tension of  power  over  our  currency  shall  die  with  it. 

THE  COINAGE  COMMITTEE  QUORUM   BROKEN  BY  THE  GOLD  POWER. 

Although  our  Committee  on  Coinage  was  organized  with  so 
small  a  margin  and  majority  in  favor  of  free  coinage,  only  1 
majority,  and  that  1  doubtful,  and  the  money  power  has  been 
able  thereby  to  prevent  the  free-coinage  men  on  our  committee 
from  securing  a  quorum  with  which  to  present  a  free-coinage 
measure  to  this  House,  yet  we  believe  the  country  is  with  us  for 
free  coinage,  and  even  a  majority  of  this  House,  if  we  can  get  the 
bank  and  gold  schemes  out  of  the  way.  The  money  power  do 
not  hesitate  to  hold  their  portion  of  our  committee  absent  to  pre- 
vent silver  legislation.  We  claim  the  country  ought  to  know  this 
fact. 

MONEY  AND  PRICE— AS  ONE  GOES  UP  THE  OTHER  COMES  DOWN. 

The  plainest  possible  terms  would  seem  most  necessary  to  sim- 
plify the  money  question,  although  in  using  some  of  them  in 
application  to  money  I  vnll  meet  prejudices  and  be  misunderstood 
by  some  and  misconstrued  by  others.     I  refer  especially  to  the 
1770 


Go 

word  cheapness  when  applied  to  money  and  the  dollars  or  units 
of  money. 

It  is  difficult,  owing  to  long-standing  prejudices  fostered  pur 
posely  by  the  self-ordained  priesthood  of  the  money  dealers,  for 
people  to  understand  that  money  derives  its  value  through  its 
power  and  rate  of  exchange  for  other  goods,  and  so  its  value  is  in 
its  exchangeability  for  other  things  on  the  same  general  principle  J 
that  wheat,  shoes,  cloth,  or  anything  else  has  value,  and  so  money 
value  is  relative  to  its  supply  and  may  be  cheap  or  dear  in  the 
same  sense  that  other  things  are  cheap  or  dear,  and  so  again  it 
measures  all  other  property  on  the  same  general  principle  that 
the  general  range  of  prices  on  other  things  measures  the  value  of 
money. 

There  is  this  peculiarity,  however,  regarding  money,  that  it  is  a 
universal  solvent  for  all  other  things,  and  is  therefore  in  uni- 
versal demand,  while  other  things  are  only  partially  so;  hence  we 
find  the  value  of  money  is  almost  wholly  regulated  by  its  supply, 
for  its  demand  is  universal,  while  other  things  are  regulated  or 
modified  in  value  by  both  supply  and  demand.  Hence,  again,  we 
find  that  the  volume  or  supply  is  the  chief  est  element  in  regulating 
value  of  money  since  the  demand  is  universal,  while  both  siipply 
and  demand  must  be  equally  and  constantly  considered  in  esti- 
mating the  value  of  other  single  kinds  of  property,  and  owing  to 
the  variations  in  supply  or  demand  for  special  kinds  or  lines  of 
goods  we  must  take  the  general  range  of  prices  on  the  staples  or 
more  generally  used  articles  for  a  basis  on  which  to  test  and  dis- 
cover the  value  of  monetary  units  such  as  dollars. 

The  value  of  dollars  or  monetary  units  will  be  found  remaining 
constant  or  uniform;  therefore,  if  we  find  the  general  range  of 
prices  are  constant ;  that  is,  prices  neither  going  up  nor  down.  This 
should  be  the  condition  to  maintain — by  Congress  if  we  would 
maintain  equity — imiformity  of  general  prices,  which  shows  with 
unerring  certainty  uniformity  or  constancy  in  the  value  of 
money. 

If,  however,  money  becomes  dear  or  high,  then  the  general  range 
of  prices  becomes  lower  or  cheaper ;  but  if  money  becomes  plenti- 
ful and  cheap,  then  prices,  moving  always  in  the  opposite  direc- 
tion, become  higher.  So,  then,  we  must  conclude  from  the  very 
nature  of  the  case  that  the  general  range  of  prices  of  commodities 
measures  the  value  of  money  as  certainly  and  on  the  same  prin- 
ciple that  money  measures  the  values  or  prices  of  commodities. 
One  is  the  standard  of  the  other,  and  the  movement  of  one  is  al- 
ways in  exact  but  reverse  movement  of  the  other,  so  that  as  one 
goes  up  the  other  always  goes  down. 
1770 5 


G6 

MONEY  AND    PKOrEHTY   PRICES  ACT  AS  A  LEVER. 

To  illustrate  this  reverse  action  of  depreciating  or  appreciating 
money  on  prices  I  have  called  into  play  tlie  action  of  a  lever  as  an 
illustration  with  money  on  one  end,  property  to  be  priced  or  valued 
in  money  on  the  other,  and  the  fulcrum  between  representing  con- 
stancy and  stability. 

There  ought  to  be  maintained  a  level  or  equilibrium  between 
money  on  one  end  of  the  lever  and  i)rice  on  the  other. 

One  thing  is  certain,  however,  that  if  one  end,  say  the  money 
end,  of  the  lever  goes  up  the  property  end  or  price  must  go  down, 
and  vice  versa. 

If  there  is  variation,  however,  in  either  end  you  can  certainly 
know  that  the  other  end  is  moving  in  the  opposite  direction. 

As  dollars  go  up — are  appreciated — their  purchasing  power  in- 
creased— property  goes  do^vn,  prices  go  down,  and  profits  are  lost. 

On  the  other  hand,  if  money  comes  down,  depreciates,  becomes 
cheaper,  it  is  equally  certain  that  the  general  range  of  prices  on 
property  appreciates,  increases,  becomes  higher. 

So  money  and  property  are  iiitted  against  each  other.  Money 
on  one  end  of  the  lever,  and  price,  or  valuation  of  property,  on  the 
other. 

It  is  the  w^ork  and  duty  of  the  people  to  produce  property,  but 
of  the  Government  to  produce  or  furnish  money  in  proper  and 
sufficient  volume  to  maintain  prices  for  the  people,  to  keep  their 
property  at  a  true  level.  Bankers  want  to  appi'eciate  their  end  of 
the  lever — that  is,  the  money  end. 

The  people  must  remember  that  as  they  are  the  workers  and  pro- 
ducers and  holders  of  property  they  are  all  on  the  property  and 
price  end  of  the  lever,  and  their  interests  suffer,  their  prices  go 
down,  and  values  shrink,  and  profits  to  them  are  destroyed  if  they 
allow  the  money  dealers  to  manipulate  the  Government  and  secure 
a  lifting  of  their  end  of  the  lever,  increasing  the  purchasing  power 
of  money. 

INTERESTS  AND   METHODS  OF   MONEY   DEALKRS  ANTAGONISTIC   TO  PRODUC- 
TIVE  ENTERPRISE. 

From  this  clear  and  exact  illustration  of  the  relation  of  money 
to  price  we  desire  also  to  expose  another  fallacy  and  false  phrase 
of  the  monetary  syndicate. 

They  are  forever  prating  about  their  interests  being  identical 
with  tlie  industrial  interests.  They  are  not,  but  are  exactly  oppo- 
site to  the  interests  of  the  producing  classes  when  they  appreciate 
money,  for  to  appreciate  or  raise  the  purchasing  power  of  money 
is  to  depreciate  all  other  property  by  lowering  prices,  and  this 
destroys  also  the  profits  that  equitably  belong  to  the  producing 
clas.ses.    They  thus  pit  themselves  against  the  people. 

1780 


67 

Another  assumption  of  theirs  equally  false  is  that  they  repre- 
sent the  business  interests  of  the  country.  They  do  not.  The 
property  and  producing  side  of  the  lever  is  the  side  of  business 
and  industry,  and  the  Government  alone  should  regulate  the  other 
end  of  the  lever,  and  that  in  the  direction  of  supplying  money  for 
circulation  and  keeping  volume,  and  therefore  prices,  both  at  a 
proper  level  and  protect  the  business  and  the  debtor  classes  against 
ruinous  ai)preciation  of  money. 

To  turn  over  to  bankers  the  privilege  of  supplying  the  money 
of  circulation  and  controlling  to  any  degree  its  volume,  the  privi- 
lege of  changing  up  or  down,  as  may  suit  their  interests,  the 
money  end  of  the  lever,  and  so  holding  power  over  the  prices, 
profits,  property,  and  prosperity  of  all  the  people,  is  to  give  them 
the  power  that  belongs  to  sovereign  government  alone. 

With  this  power  to  supply  the  currency  and  control  its  volume 
they  can  devour  the  surplus  and  encroach  rapidly  upon  the  wealth 
ah-eady  held  by  the  people,  as  they  have  been  so  rapidly  doing  for 
twenty-five  years. 

They  prate  about  elasticity  of  bank  currency;  but  it  is  contrac- 
tion and  expansion,  sudden  and  without  warning,  and  in  the  in- 
terests of  the  banks,  who  work  the  india-rubber  scheme,  and  al- 
ways to  the  disadvantage  of  the  rest  of  the  people,  and  to  the  ruin 
of  one  generation  of  debtors  after  another. 

They  talk  aboufr  maintaining  public  confidence;  but  instead  of 
playing  a  fair  game  they  demand  as  a  condition  that  they  shall  hold 
all  the  trump  cards  and  thus  keep  the  people  on  the  other  side  en- 
tirely at  their  mercy. 

They  talk  about  honest  and  best  dollars;  by  which  they  mean 
the  highest  purchasing-power  dollars,  which  kind  is  a  cheat  and 
a  robbery  of  all  who  labor  or  sell  anything  at  the  ruinously  low 
prices  necessary  to  obtain  the  high  gold-standard  dollars.  They 
are  thus  blocking  the  wheels  of  industry  and  forcing  debtors  to 
bankruptcy  or  crime.  What  chance  have  the  people  if  banks  con- 
trol the  volume  of  money? 

THE  PBODUCINO  CLASSES  HAVE  LOST  $10,000,000,000  OR  MORE  Bf  THE  APPRE- 
CIATION OF  MONEY. 

It  is  safe  to  say  that  if  the  same  tact  and  energy  had  been  used 
during  the  last  twenty-five  years  by  CongTess  to  appreciate  prop- 
erty and  the  prices,  that  is  to  say,  the  general  range  of  prices 
thereon,  that  has  been  used  to  appreciate  money  and  advance  the 
interests  and  profits  of  the  money  dealers,  the  producing  classes 
in  this  country  would  have  been  worth  at  least  ten  thousand  mil- 
lion dollars  more  than  they  are  to-day.  A  truer  estimate  would 
be  that  their  wealth  and  holdings  would  be  twenty  thousand  mil- 
1770 


68 

lions  more  than  it  is  to-day.  The  agricultural  classes  alone  would 
hold  ten  thousand  million  dollars  more  wealth  than  now. 

But  this  would  have  ret^uired  an  appreciation  or  at  least  the 
maintenance  of  price  and  i)roperty  values  and  a  protection  of 
profits  instead  of  an  appreciation  of  money  and  legislation  con- 
stiintly  in  the  direction  of  securing  greater  advantages  and  profits 
to  the  creditor  classes. 

This  at  least  would  have  required  a  protection  against  deprecia- 
tion of  prices. 

For,  let  it  never  be  forgotten,  that  the  appreciation  of  either 
prices  or  money  is  the  depreciation  of  the  other — as  money  goes 
up  prices  come  down,  and  as  prices  go  up  money  comes  down. 
The  law  is  invariable,  and  the  appreciation  or  depreciation  of 
either  prices  or  dollars  is  dependent  on  the  relative  volume  of 
currency  in  circulation. 

THE  DISHONEST  DOLLAR. 

Let  us  be  plain  about  the  matter  and  say  what  all  competent 
judges  know  but  what  few  dare  to  say,  that  to  have  better  prices 
we  must  have  cheaper  money,  cheaper  dollars,  dollars  of  less  pur- 
chasing power. 

But  is  not  a  cheaper  dollar  a  dishonest  dollar? 

No,  not  necessarily. 

There  is  no  dishonesty  in  keepiagthecountry  well  supplied  with 
reasonably  cheap  dollars. 

The  very  fact  that  there  will  be  a  good  supply  of  dollars  in  cir- 
culation is  a  guaranty  that  they  will  be  reasonably  cheap  and  that 
prices  consequently  will  be  reasonably  good. 

Dollars  that  are  not  reasonably  cheap,  making  prices  reasonably 
good,  are  dishonest  or  unfair  dollars,  unfair  and  unjust  to  nine- 
teen-twentieths  of  our  people  who  are  dependent  upon  exchanging 
products,  property  or  labor,  for  dollars,  and  the  whole  question  of 
honesty  is  involved  in  the  question  of  rates  or  prices  at  which  they 
must  exchange  what  they  have  to  obtain  dollars. 

High  value  or  appreciated  dollars  produce  low  and  depreciated 
prices  on  all  other  forms  of  property  and  labor,  and  this  robs  pro- 
ducers, and  especially  robs  those  who  have  debts  and  fixed  amoxmts 
and  taxes  to  pay. 

Dollars,  then,  have  been  dishonest  ever  since  they  began  to  ap- 
preciate under  the  policies  of  the  money  dealers,  who  have  con- 
trolled financial  legislation  for  twenty-five  years. 

The  honesty  of  dollars,  therefore,  must  be  determined  by  look- 
ing at  the  general  range  of  prices. 

Are  prices  too  low?    Then  money  is  too  high  and  dishonest. 

Are  prices  good  and  running  at  a  fair  level  and  profitable  to 

1770 


69 

producers?  Then  the  dollars  in  circulation  are  honest  and  reasona- 
bly cheap  in  relation  to  prices  or  exchange  for  property.  When 
prices  are  honest  and  fair  to  the  debtors  and  producers,  then  money 
is  honest  and  fair. 

Are  prices  abnormally  high  so  that  you,  in  the  old  phrase,  get  a 
hat  full  of  dollars  for  a  pair  of  boots,  or  barrel  of  pork,  or  a  few 
bushels  of  wheat,  then  money  or  dollars  must  be  unreasonably 
cheap,  and  therefore  dishonest  again  and  unfair  toward  the  cred- 
itor. 

The  whole  question  of  the  honesty  of  the  dollars  in  general  cir- 
CTilation  is  dependent  upon  the  question  of  general  prices,  for  one 
is  always  a  true  index  of  the  other. 

To  look  at  the  material  of  which  the  dollars  are  composed  with 
the  idea  that  the  value  of  the  material  in  the  dollar  as  a  commod- 
ity is  the  essential  basis  upon  which  to  measure  the  value  or 
honesty  of  the  dollar  for  monetary  uses  is  a  childish  delusion  and 
resTilts  from  ignorance  of  the  nature  and  function  of  money,  which 
is  an  instrument  of  exchange  and  should  be  a  constant  support  of 
prices  and  measure  of  values  in  the  payment  of  debt. 

THE  MAINTENANCE  OF  HONEST  PRICES  SHOWS  HONEST  DOLLARS. 

Look  to  prices,  then,  to  estimate  the  value  and  honesty  of  dollars. 

Is  the  farmer  getting  $1.25  per  bushel  for  his  wheat  and  16  cents 
per  pound  for  his  cotton  as  examples  of  the  general  range  of  prices 
necessarily  consequent  upon  the  volume  of  currency  circulating 
and  regulating  the  prices  and  payment  of  debts  as  the  nation 
came  out  the  great  struggle  for  the  maintenance  of  its  existence? 

Then  these  are  honest  prices  brought  about,  not  by  selfish 
schemes  of  farmers,  manufacturers,  and  producers  generally,  but 
by  the  patriotic  action  and  highest  and  best  motives  of  the  truest 
friends  of  the  people  and  their  Government.  Remember  that  the 
whole  country  had  adjusted  its  business,  both  its  debits  and  cred- 
its and  its  varied  industries  and  commercial  conduct,  to  the  vol- 
ume of  currency  and  range  of  prices  then  existing. 

This,  the  established  volume  of  currency  and  range  of  prices  fol- 
lowing the  war,  was  honest  money  and  honest  prices.  These  two 
always  go  together. 

Equity  demanded  the  maintenance  of  these  prices,  and  main- 
tenance of  prices  demanded  the  maintenance  of  a  proper  volume  of 
currency. 

This  currency,  to  maintain  these  general  post  bellum  prices,  as 
from  1865  to  1868,  should  have  expanded  in  volume  to  correspond 
with  the  expansion  and  extension  of  the  volume  of  business  and 
population.  If  this  had  been  done  prices  would  have  been  upheld 
and  the  equities  of  contract  between  debtors  and  creditors  would 
1770 


.      70 

have  been  maintained.  This  maintenance  of  equity  and  protec- 
tion of  the  interests  and  prices  of  the  producing  and  true  business 
world  should  have  been  vigilantly  and  thoroughly  done  by  the  Gov- 
ernment.    This  is  tlie  true  province  of  government. 

But  contraction  and  demonetization  policies  have  been  followed 
instead,  and  so  now  the  farmer  to  pay  a  hundred-dollar  debt  or  a 
hundred  dollars  in  taxes,  must  produce  and  sell  200  biishels  of 
wheat  to  pay  the  debt  instead  of  80  or  100  bushels.  This  more 
than  doubles  the  burden  of  payment  upon  him.  The  same  great 
loss  comes  upon  all  producers  in  their  efforts  to  obtain  dollars  in 
the  general  fall  of  prices  consequent  upon  the  raise  in  the  pur- 
chasing power  of  the  dollars. 

But  the  creditor  gains  what  the  producer  loses.  He  gets  200 
bushels  or  the  value  of  it  where  the  value  of  80  bushels  only  was 
due  him. 

The  general  fall  of  prices,  which  means  the  appreciation  of  money, 
has  caused  a  loss  of  about  one-half  on  price  and  a  doubling  of  the 
valiie  of  money  to  the  very  great  advantage  of  the  creditor  classes. 

This  wrong  upon  the  people  is  greater  than  generally  supposed. 

That  it  has  not  been  forced  upon  them  all  at  once  but  has  been 
by  gradual  process  of  appreciating  the  money  scattering  the  losses 
and  disturl)ance3  over  a  period  of  twenty-five  years  has  not  in  any 
manner  lessened  the  injustice  of  it,  but  it  has  been  borne  by  the 
people  with  a  degree  of  patience  and  submission  that  could  not 
have  been  otherwise  obtained. 

I  am  not  sure  but  this  generation  would  be  better  off  if  the  change 
had  come  all  at  once  instead  of  by  slow  gradations. 

The  boy  who  undertook  to  shorten  his  dog's  tail  by  cutting  off 
an  inch  at  a  time  may  have  secured  one  point  by  getting  his  dog 
hardened  to  the  process;  but  I  am  not  sure  but  what  the  dog 
would  have  been  as  well  off  if  the  tail  had  been  all  cut  off  at  once. 

LOSSES  ON  NATIONAL  DEBT  BY  APPUECTATION  OF  MONEY. 

The  great  losses  to  the  people  on  their  general  business  for  the 
last  twenty-five  years  can  be  perhaps  illustrated  by  noticing  the 
losses  to  the  Government  on  the  national  debt  by  the  same  proc- 
esses; but  we  must  remember  that  the  national  debt  only  repre- 
sents about  one-eighth  to  one-tenth  the  entire  volume  of  the  jieo- 
ple's  indebtedness  upon  which  their  losses  have  occurred. 

Remembering  that  the  people  in  general  produce  and  sell  com- 
modities as  a  means  to  obtain  the  money  necessary  to  pay  debts,  I 
call  your  attention  to  the  following  ascertained  facts  which,  for 
present  use,  I  derive  chiefly  from  the  speech  of  Senator  Jones,  in 
the  United  States  Senate,  October  23,  1893,  page  267  of  his  pub- 
lished speeches: 

United  States  bonds  sold,  1801868,  nominal  value,  S2,019,975,70a 
1770 


71 

The  Government  received  for  these  only  $1,400,000,000. 
The  average  rate  received  was  67  per  cent  of  par  value. 
These  were  payable  when  due  in  lawful  money,  interest  in  coin. 
The  Government  has  paid  back  on  principal  $1,756,000,000. 
There  has  been  paid  in  interest  on  them  $3,538,000,000. 
Paid  in  premiums  on  bonds  bought  $58,000,000. 

Total  amount  paid  (three  times  the  amount  received)  $4,353,000,000. 
The  value  of  money  is  its  purchasing  power,  and  this  to  main- 
tain equity  ought  to  maintain  uniform  prices. 

The  purchasing  power  received  from  bondholders  in  wheat  was 
1,007,000,000  bushels.  If  equity  had  been  maintained  we  ought 
to  be  able  to  pay  the  debt  principal  with  the  price  of  same 
amount  of  wheat,  but  by  appreciation  or  increase  of  the  purchas- 
ing power  of  the  dollar  lowering  the  prices  of  commodities  we 
find  we  have  paid  on  principal  1,986,000,000  bushels;  on  interest, 
2,974,000,000  bushels;  in  premiums,  62,000,000  bushels;  total  paid, 
5,022,000,000  bushels. 

This  is  paying  five  times  as  much  in  equity  as  originally  re- 
ceived. If  estimated  in  cotton  we  would  have  paid  94,690,000 
bales,  whereas  we  received  on  the  then  cotton  prices  14,184.000 
bales,  or  less  than  one-sixth  as  much  as  has  been  paid  back  to 
them,  and  yet  to  pay  the  remainder  to-day  will  require  as  much 
wheat  or  cotton  as  woiild  have  paid  off  the  entire  net  amount  re- 
ceived of  them  at  the  close  of  the  war. 

It  is  no  sufficient  reply  to  say  that  those  were  "war  prices,"  for 
they  were  also  "war  values"  of  dollars,  and  both  dollars  and 
prices  were  the  same  to  all,  whether  bondholders  or  bond  payers. 
Now,  figured  in  the  general  range  of  prices  on  commodities,  the 
results  are  substantially  the  same,  as  illustrated  in  the  two  great 
staples  of  wheat  and  cotton. 

How  much,  then,  have  been  the  losses  already  accrued  by  in- 
creasing the  value  of  dollars  and  lowering  prices?  Estimating 
that  the  interest  paid  doubles  the  amount  of  principal  on  pay- 
ments so  far  made,  the  people  have  lost  not  less  than  $3, 000,000, U(jO 
on  the  national  debt,  and  they  have  lost  not  less  than  five  times  as 
much,  or  $15,000,000,000,  on  all  other  kinds  of  debts.  No  other 
age  or  nation  ever  suffered  siich  robbery.  Shall  we,  then,  vote  to 
allow  tliese  extortions  to  continue? 

Shall  we,  in  presence  of  this  grievous  wrong, 
In  this  supremest  moment  of  all  time. 
Stand  trembling,  cowering,  when  with  one  bold  stroke 
These  groaning  millions  might  be  ever  free  ? — 
And  that  one  stroke  so  just,  so  greatly  good, 
So  lev^l  with  the  happiness  of  man 
That  all  the  angels  will  applaud  the  deed. 
Mr.  HAINER  of  Nebraska.     If  the  gentleman  will  pardon  a 
further  interruption,  I  desire  to  submit  for  his  consideration,  con- 
ceding his  argument  to  be  soimd,  that  with  an  increased  circula- 
1770 


72 

tion  we  have  a  consequent  and  proportionately  higher  price;  with 
higher  prices  a  consequent  and  proportionately  greater  prosperity, 
and  that  the  Government  has  the  power  to  increase  this  circula- 
tion by  an  issue  of  paper  money  in  such  quantities  as  Congress 
desires  or  deems  conducive  to  the  prosperity  of  the  people;  then 
why  i^lace  a  limit  on  such  issue?  Why  not  have  unlimited  issues 
of  paper  money  and  thus  usher  in  a  millennium  of  prosperity? 

As  I  know  my  friend  would  not  seriously  propose  a  Utopian 
scheme,  but  wishes  to  be  practical,  will  he  not  admit  that  paper 
money  is  simply  andin  the  last  analysis  the  obligation — debt — of  the 
Government,  which  must  at  some  time  be  either  paid  or  repudiated, 
and  when,  we  authorize  the  issue  of  paper  money  we  thereby  mort- 
gage the  future  revenues  of  the  Government?  The  seeming  pros- 
perity attending  the  issue  of  even  a  limited  amount  is  that  of  the 
mortgagor  who  has  just  made  a  loan,  is  spending  the  proceeds,  and 
has  not  yet  been  called  upon  to  pay. 

Mr.  COFFEEN  of  Wyoming.  I  am  pleased  to  find  siich  interest 
in  my  discussion  of  the  currency  question  and  do  not  object  to 
the  interruption  of  my  friend  from  Nebraska. 

The  question  submitted,  briefly  stated,  is: 

First.  Why  not  have  imlimited  issue  of  currency  if  expansion 
brings  prosperity? 

Second.  Is  not  paper  money  issued  by  the  Government  in  the 
form  of  debt  which  must  be  paid  or  repudiated? 

Third.  Is  not  the  prosperity  secured  by  better  prices  if  occa- 
sioned by  Government  issue  of  currency  notes  like  the  prosperity 
of  one  spending  boi  rowed  money,  which  prosperity  will  be  re- 
versed when  pay  day  comes? 

These  are  questions  ai-ising  sometimes  out  of  the  failure  to  com- 
prehend the  true  nature  of  money  and  the  Government's  relation 
to  it. 

As  to  the  first,  why  not  issue  an  unlimited  amount  of  Govern- 
ment paper  if  more  money  brings  more  prosperity? 

A  short  yet  incomplete  answer  would  be  by  contrasting  the 
Government's  condition  with  that  of  a  hungry  or  sick  man  and 
to  say,  If  a  man  is  hungry  and  needs  more  food,  why  not  stufr 
him  with  an  unlimited  amount  of  food?    The  case  is  similar. 

If  a  man  is  weak  and  emaciated  for  want  of  blood  in  sufficient 
quantity  to  revive  him,  why  not  furnish  him  an  unlimited  quan- 
tity of  blood? 

A  prf)per  amount  of  food  is  useful  and  a  proper  amount  of  blood 
to  circulate  through  the  body  is  necessary  to  health  and  prosperity. 

If  prices  are  too  low  and  people  unable  to  pay  their  debts  and 
make  any  profit  on  their  labor  and  ijroduce  and  workers  are  idle 
for  want  of  employment  and  more  money  will  cure  the  evil  and 
1770 


73 

raise  prices  and  employ  labor,  then,  some  say  why  not  issue  too 
much  money  and  give  the  patient  an  overdose  of  the  remedy? 

MONEY  IS  THE  LIFE-BLiOOD  OF  THE  NATION. 

The  need  of  a  proper  supply  of  money  to  circulate  through  the 
body  politic,  or  the  organized  nation,  is  like  the  need  of  food  or 
blood  for  the  human  body. 

Money  is  an  instrumentality  to  facilitate  exchange  among  the 
people  so  necessary  to  their  existence  in  civilized  life,  and  also  to 
maintain  prices  at  an  equitable  standard  so  as  to  enable  all  the  in- 
dustrial interests  and  people  of  the  nation  a  fair  opportunity  to  cal- 
culate safely  on  the  values  or  prices  of  their  future  crops,  products, 
and  manufactures  in  relation  to  all  kinds  of  obligations,  debts, 
profits,  and  emplojnnent  of  themselves  and  others,  as  w^ell  as  the 
employment  of  their  acquired  property  resources. 

If  prices  are  properly  sustained,  and  this  depends,  as  my  friend, 
at  least  for  the  present,  has  admitted,  on  the  proper  amount  of 
money  in  circulation,  then  prosperity  can  and  will  ensue  in  all 
commercial  and  manufacturing  affairs.  Not  only  can  all  debtors 
get  dollars  in  exchange  at  fair  prices  for  their  labor  and  products 
with  which  to  pay  debts  and  interests  and  taxes,  but  also  all  men, 
in  whatever  productive  or  manufacturing  enterprises  they  may 
engage,  can  safely  count  on  the  profits  that  ought  to  obtain  in  the 
future  if  prices  are  maintained. 

If  prices  and  the  money  which  sustain  prices  remain  at  a  fair 
and  eqiiable  standard  their  investments  in  property  and  labor  in 
general  will  be  profitable. 

But  while  there  are  debtors  there  are  creditors.  While  there 
are  sellers  of  goods  there  are  buyers.  While  there  are  calculations 
for  a  reasonable  profit  there  are  calculations  and  a  reliance  against 
unreasonable  profits  and  prices  on  the  part  of  those  whose  forms 
of  wealth  and  resource  are  fixed  and,  so  to  say,  not  productive  of 
anything  that  would  get  a  compensating  benefit  from  higher 
prices. 

Now,  if  I  have  made  this  sufficiently  plain,  my  friend  will  at 
once  see  and  agree  with  me  that  money  value,  and  price  or  prop- 
erty value,  which  represent  the  two  ends  of  a  swinging  lever, 
ought  to  be  kept  at  a  fair  level,  so  that  neither  end  of  the  lever 
goes  so  high  as  to  sink  the  other  into  ruin  and  injustice. 

The  question  of  money  volume  is  a  question  of  justice,  but  so, 
too,  is  the  question  of  prices.  I  have  already  shown  how  property 
values  swing  against  money  values  as  on  a  lever. 

The  prosperity  that  we  want  is  one  where  justice  prevails  and 
equity  between  the  money  dealers  and  property  producers,  or 
wealth  producers,  is  maintained. 

1760 


In  the  face  of  this  idea  of  prosperity  for  the  whole  and  all 
classes,  fonmled  upon  justice  to  all.  how  can  iny  friend  insist  that 
an  unlimited  issue  of  money  would,  by  raising  prices  constantly 
liigher  when  coimted  in  that  overissue,  be  conducive  to  pros- 
l)erity? 

The  true  fvinction  of  money  is  to  maintain  equity  as  well  as  to 
facilitate  exchange  of  commodities,  and  equity  protests  against 
too  great  expansion  on  the  one  hand  as  against  too  great  contrac- 
tion on  the  other. 

MONEY  TO  MAINTAIN  EQUITY  AS  WELL  AS  TO   EXCHANGE  COMMODITIES. 

We  can  destroy  equity  and  the  proper  function  of  money,  let 
my  friend  remember,  as  easily  by  contraction  as  by  expansion. 
It  is  as  great  a  wrong  for  prices  to  fall  too  low  as  it  is  to  raise 
them  too  high;  and,  indeed,  when  you  consider  how  many  are  in- 
terested on  the  property  side  and  their  needs  in  contrast  with  the 
few  and  the  rich  on  the  money  side  of  the  lever,  if  we  depart  from 
a  proper  level  at  all  it  ought  to  be  by  expanding  the  volume  of 
money  and  raising  the  value  of  property  and  products  instead  of 
contracting  the  money  and  lowering  the  prices  of  all  products  and 
property. 

Do  you  ask  me  what  is  the  proper  volume  and  the  proper  level 
between  money  and  price?  I  have  already  gone  over  that  subject, 
but  ^\^ll  say  in  passing  that  the  $20,000,000,000  of  debts  of  our  peo- 
ple, that  on  present  low' prices  of  i)roperty  requires  twice  as  much 
labor  and  products  of  labor  to  pay  as  it  required  in  the  period  and 
conditions  out  of  which  these  debts  and  renewals  have  arisen — that 
is,  the  period  following  the  civil  war,  in  which  money  was  abun- 
dant— demands  of  us,  in  the  interestof  equity  andfair  play,  that  we 
again  double  our  money  volume  by  fair  yet  sure  gi-adations,  so  that 
prices  shall  again  be  restored  to  the  old  level  from  which  they 
have  been  cast  down  by  the  schemes  of  contraction  and  demoneti- 
zation. By  breaking  down  equity  we  have  broken  down  pros- 
perity. 

If  the  volume  of  business  transactions  and  exchanges  requiring 
the  use  of  and  counting  in  money  is  fourfold  what  it  was  at  the 
close  of  the  war,  and  I  believe  it  is  fully  that,  then  we  need  not 
two  times  but  four  times  the  volume  of  money  we  had  in  general 
circulation. 

CURRENCY  IS  ESSENTIALLY  TRANSFERABLE  DEBT 

On  the  second  question — is  not  the  paper  money  issued  by  the 
Government  in  the  form  of  a  debt? — let  me  answer  yes. 

All  currency  is  debt  or  in  the  nature  of  a  certificate  of  indebt- 
edness, and  is  carried  or  circulated  or  held  by  us  as  representing 
something  sold  or  services  rendered  when  it  was  received, for 
1770 


75 

which  property  or  service  compensation  is  not  yet  made,  but  re- 
mains in  suspense  until  we  pass  the  currency  or  money  to  some 
other  person  for  property  or  service  that  we  receive  from  them. 

When  we  buy  some  other  person's  property  or  service  or  pay 
it  out  to  others  for  value  received  then  we  get  pay  for  the  services 
or  property  we  parted  with  when  we  first  received  that  money. 
From  the  time  we  receive  the  money  until  we  part  with  it  we 
carry  it  as  an  evidence  of  property  sold  or  service  rendered,  and 
it  is  therefore  and  in  this  sense  in  the  form  and  nature  of  a  debt. 
When  it  passes  to  another  in  exchange  for  his  service  or  property 
the  debt  is  transferred  to  him  and  is  evidence  in  the  case  of  money 
or  currency  that  the  society  or  the  Government  owes  him  so  many 
dollars.  When  he  passes  it  or  transfers  it  to  the  next  one  the  debt 
is  again  transferred.  So  we  may  say  currency,  money,  all  money 
is  in  the  nature  of  transferable  debt.  Money  is  transferable  debt, 
and  do  not  be  startled  if  you  find  that  all  money,  whether  coin  or 
paper  is  transferable  debt.  The  only  exception  is  that  when  one 
takes  a  coin  and  uses  the  material  in  it  as  a  commodity  as  in  mak- 
ing something  useful  out  of  it  besides  money,  then  in  that  case  he 
has  accepted  the  material  as  pay  for  the  debt,  and  the  coin  in  con- 
sequence ceases  to  be  money. 

So  teaches  MacLeod,  the  great  English  economist,  in  his  Eco- 
nomic Philosoi)hy,  and  so  teach  many  other  profound  writers  as 
to  this  question. 

On  page  188  of  volume  1  he  says: 

We  may  therefore  lay  down  as  our  fundamental  conception  that  currency 
and  transferable  debt  are  convertible  terms;  whatever  represents  transfer- 
able debt  of  any  sort  is  currency;  and  whatever  material  the  currency  may 
consist  of  it  represents  transferable  debt  and  nothing  else. 

In  volume  2,  page  365,  MacLeod  again  says: 

We  shall  find  that  bj-  starting  from  our  fundamental  definition  of  currency 
as  transferable  debt  and  that  the  value  of  the  currency  depends  upon  the 
quantity  of  the  transferable  debt  which  it  represents,  the  fallacy  of  this 
theory  (that  of  issuing  on  "  good  bills  ")  can  be  demonstrated  with  great  ease 

In  his  attack  on  what  he  calls  Lawism,  after  quoting  from  John 
Law,  MacLeod  says,  page  34G,  volume  2: 

In  this  sentence  is  concentrated  the  whole  essence  of  that  eternal  delusion 
*  *  *  which  we  designate  Lawism.  It  is,  indeed,  nothing  but  the  stupen- 
dous fallacy  that  money  represents  commodities.  *  *  *  No  man  who  does 
not  thoroughly  understand  the  great  fundamental  doctrine  established  by 
Turgot  and  others,  that  money  does  not  represent  commodities,  can  ever  have 
sound  ideas  on  this  subject.  Money  does  not  represent  commodities  at  all, 
but  only  debt  or  services  due  which  have  not  yet  received  their  equivalent 
in  commodities. 

So  Aristotle  taught  in  ancient  days  (Economic  Phil.,  volume  1, 
page  191): 

But  with  regard  to  a  future  exchange  (if  we  want  nothing  at  present,  that 
it  may  take  place  when  we  do  want  something),  money  is  our  security. 
1770 


76 

So  Adam  Smith,  in  Wealth  of  Nations,  says: 

A  guiuoa  may  bo  considered  as  a  bill  for  a  certain  quantity  of  necessaries 
ana  oonveniencea  upon  all  the  tradesmen  in  the  neighborhood. 

Bandeau,  the  economist,  is  quoted  by  MacLeod  as  saying,  page 
191,  volume  1: 

This  coined  money  In  circulation  is  nothing,  as  I  have  said  elsewhere,  but 
efifeotivo  titles  on  the  general  mass  of  useful  and  agreeable  enjoyments. 

Mr.  Henry  Thornton  says: 

Money  of  every  kind  is  an  order  for  goods. 

Again  MacLeod  says,  after  quoting  other  authorities  to  show 
that  money  represents  debt,  page  195,  volume  1: 

So  that  when  a  person  receives  an  obligation  expressed  in  metallic  cur- 
rency, he  is  able  to  command  the  services,  not  only  of  the  original  debtor,  but 
also  those  of  the  whole  industrial  conomunity.  There  is  clearly,  then, no  dif- 
ference in  principle  between  a  metallic  and  a  paper  currency. 

now  DOES  THE  GOVERNMENT  PAY  ITS  NOTBSt 

On  the  third  question,  when  the  Government  issues  even  a  lim- 
ited amount  of  its  own  notes,  will  it  not  be  like  a  mortgagor  who 
borrows  money  to  spend  that  must  afterwards  be  paid? 

Yes,  in  some  slight  degi-ee.  But  the  repayment  by  the  Govern- 
ment is  chiefly  in  receiving  the  notes  circulating  back  again  in 
taxes,  customs,  excises,  and  so  on,  in  exchange  for  what  the  Gov- 
ernment has  done  and  is  doing  in  behalf  of  its  own  people. 

There  is  no  mortgage  about  it,  but  there  is  an  exchange  of  serv- 
ices, with  the  notes  of  the  Government  circulating  in  the  interven- 
ing time,  the  Government  redeeming  its  currency  notes  by  receiv- 
ing them  back. 

And  still  more,  the  note  is  being  redeemed  every  day,  when  it 
passes  among  the  people,  being  a  legal  tender  and  competent  unit 
of  account  in  all  monetary  transactions  among  the  people. 

But  it  is  the  duty  of  the  Government  to  both  issue  an  adequate 
supply  of  currency  and  by  reissuing  and  making  all  of  it  legal 
tender  keep  it  out  in  circulation. 

The  people  need  this  currency,  and,  since  they  are  in  an  organ- 
ized form  the  Government  also,  it  is  practically  the  people  pro- 
viding themselves  with  a  proper  currency  and  agreeing  that  they 
will  circulate  it  also  among  themselves. 

VALUE  IS  NOT  INTRINSIC  IN  ANYTHING. 

Many,  especially  many  advocates  of  bank  interests,  still  cling 
to  the  idea  that  the  money  of  ultimate  redemption,  as  they  call  it, 
must  have  and  does  have  intrinsic  value.  This  arises  from  a  mis- 
understanding of  the  nature  of  value.  For  anything  to  have 
value  it  must  be  exchangeable  for  something  else  of  value  with 
which  it  is  compared. 
1770 


77 

If  you  say  to  me  that  any  certain  thing  has  value,  you  are  giv- 
ing me  but  one  side  of  the  comparison  or  equation.  I  will  reply 
by  asking  value  in  what  or  what  value,  and  your  answer  will  com- 
plete the  equation  or  comparison. 

Thus,  if  you  say  this  horse  is  value,  I  ask  value  in  what?  You 
may  say  in  cattle,  and  equal  to  three  cattle,  or  you  may  say  in 
dollars,  and  is  equal  to  or  valued  at  $100. 

To  say  that  a  thing  has  value  in  itself  or  per  se  is  an  error,  and 
it  is  as  useless  as  to  say  that  a  number  is  equal  or  has  equality 
without  giving  us  the  other  term  of  the  comparison. 

If  you  say  15  is  equal  to  3  times  5  we  understand  it. 

If  you  say  a  certain  house  is  distant  one  mile,  you  shotdd  also 
give  us  the  term  of  comparison  by  saying,  for  instance,  one  mile 
from  the  bridge. 

So  value  of  anything  always  implies  comparison  with  some- 
thing else  outside  of  itself,  and  so  value  is  by  comparison  or  ex- 
trinsic. 

Value  is  not  intrinsic. 

Qualities  or  properties  of  things  are  intrinsic,  as  brittleness  for 
glass,  malleability  for  gold,  and  so  on,  but  value  is  not  intrinsic. 
It  is  founded  on  exchangeability  for  other  things  and  on  demand 
and  stipply,  and  is  measured  by  its  power  in  exchange  for  other 
things. 

On  this  definition  of  value,  which  we  shall  find  applies  to  dol- 
lars and  all  other  denominations  of  money  as  well  as  to  all  that 
money  can  buy,  we  have  thus  tried  to  comprehend  the  truth  or 
statement  that  value  is  extrinsic  and  not  intrinsic  in  anything. 

Now,  for  authorities,  for  some  attach  more  value  to  authorities 
than  they  do  to  the  reasonableness  of  any  proposition;  and  again, 
quoting  authorities  is  a  convenient  way  of  showing  even  the  rea- 
sonableness of  our  propositions  in  other  ways  of  stating  them. 

Professor  Jevons  says  in  his  work  on  Political  Economy: 

Value  in  exchange  expresses  nothing  but  a  ratio,  and  the  term  should  not 
be  used  in  any  other  sense.  To  speak  simply  of  the  value  of  an  ounce  of  gold 
is  as  absurd  as  to  speak  of  the  ratio  of  the  number  17.  What  is  the  ratio  of 
the  number  17?  The  question  admits  no  answer,  for  there  must  be  another 
number  named  in  order  to  make  a  ratio. — The  Theory  of  Political  Economy, 
page  83. 

John  Stuart  Mill,  in  defining  "value,"  says,  touching  question 
of  exchange: 

The  word  '"value,"  when  used  without  adjunct,  always  means,  in  political 
economy,  value  in  exchange.— Political  Economy,  Book  3,  chapter  1. 

And  so,  too.  Prof.  Francis  A.  Walker  says: 

Value  is  not  a  property  of  anything.    It  arises  whoUy  out  of  relations  which 
exist  between  things.— 3/one^  in  its  Relations  to  Trade  and  Industry,  page  32. 
1770 


78 

Prof.  A.  L.  Perry,  in  his  work  on  Political  Economy,  speaking  of 
value, says: 

Value,  then,  is  not  a  quality  of  single  things,  belonging  to  them  as  if  by  nature, 
as  luvi-dnoss  is  a  (luality  of  a  rock  or  gravity  is  an  attribute  of  gold;  because 
all  physical  (lualities  in  physical  things,  all  that  which  niakesor  helps  to  make 
anything  such  as  it  is,  may  be  learned  by  a  study  of  the  things  themselves,  by 
themselves.  The  questioning  of  the  senses,  however  minute,  the  test  of  the 
laboratory,  however  delicate,  can  never  determine  how  much  anything  is 
worth,  because  that  always  implies  a  comparison  between  two  things  or  more 
strictly  a  comparison  between  two  renderings  in  exchange.  Value  is  not  an 
attribute  of  single  things;  not  even  if  the  things  be  physical  and  tangible.— 
Principles  of  Political  Economy,  page  34. 

Senator  John  P.  Jones  says: 

Numberless  citations  could  be  made  from  writers  of  the  first  rank  to  prove 
that  value  is  not  a  property  residing  in  any  object,  and  that  therefore  it  can 
not  by  any  possibility  bo  "intrinsic." 

A  correct  definition  of  value  I  conceive  to  be:  Human  estimation  placed 
upon  desirable  objects  whose  quantity  is  limited. 

•  ♦••••♦ 

If  value  were  intrinsic,  if  it  resided  in  the  article,  it  could  not  be  taken 
from  it,  and  it  could  not  be  changed  by  changes  in  the  number  of  the  objects 
of  which  value  is  asserted,  or  with  modifications  in  the  desire  of  men  to  be- 
come posse.isftd  of  such  articles.  Qualities  that  are  inherent  do  not  vary  with 
the  shifting  degrees  of  estimation  in  which  they  may  be  held  by  mankind. 

DEFINITION  OF  VALUE. 

Aristotle  said:  Now  the  term  "value"  is  used  in  reference  to  ex- 
ternal goods.     (Ethics  IV,  C  3,  Nicomacs): 
The  vahie  of  a  thing  is  what  it  can  be  sold  for. 
MacLeod  says  (volume  1,  page  185) : 

We  have,  then,  this  definition:  The  value  of  any  economic  quantity  is  any 
other  economic  quantity  for  which  it  can  be  exchanged.  » 

If  we  are  told  that  an  oljject  is  distant,  or  equal,  we  immediately  ask,  dis- 
tant from  what  or  equal  to  what?  So  it  is  equally  clear  that  a  single  object  can 
not  have  value.  If  we  hear  of  an  object  having  value  we  must  always  inquire, 
value  in  what?  And  it  is  clear  that  as  it  is  absurd  to  speak  of  a  single  object 
having  absolute  or  intrinsic  distance  or  being  an  absolute  or  intrinsic  quality, 
«o  it  is  equally  absurd  to  speak  of  absolute  or  intrinsic  value.  And  as  no  single 
body  can  be  a  standard  of  distance  or  equality,  so  no  single  obiect  can  possibly 
be  a  standard  of  value. 

*  *    *    Value  necessarily  reqtiires  the  concurrence  of  two  minds. 

*  ♦    *    There  is  no  such  thing  as  absolute  value  or  universal  value. 

Let  me  quote  further  from  those  whose  opinions  carry  great 
weight.  In  MacLeod's  Elements  of  Economics,  on  page  231  of 
first  volume,  we  find: 

This  unhappy  phrase  "intrinsic  value  "  meets  us  at  every  turn  in  econom- 
ics; and  yet  the  slightest  reflection  will  show  that  to  define  value  to  be  some- 
thing external  to  a  thing,  and  then  to  be  constantly  speaking  of  intrinsic 
value,  are  self -contradictory  and  inconsistent  ideas.  And  it  came  to  be  held 
that  labor  is  necessary  to  and  is  the  cause  of  all  value. 
1770 


70 

On  page  233  the  following  occurs: 

The  expression  "  intrinsic  value  "  is  so  common  that  persons  are  apt  to  over- 
look its  incongruity  of  ideas;  it  is,  however,  a  plain  contradiction  in  terms, 
and  if  we  use  words  of  similar  import  whose  meaning  has  not  been  so  cor- 
rupted, its  absurdity  will  be  apparent  at  once.  Thus,  who  ever  heard  of  in- 
trinsic distance,  or  of  an  intrinsic  ratio?  The  absurdity  of  these  expressions 
is  apparent  at  once,  but  they  are  in  no  way  more  absurd  than  intrinsic  value. 
If  we  speak  of  the  intrinsic  value  of  money,  we  may  just  as  well  speak  of 
the  intrinsic  distance  of  St.  Paul's,  or  the  inti-insic  ratio  of  five.  To  say  that 
money  has  intrinsic  value  because  it  is  material  and  the  produce  of  labor, 
and  that  a  bank  note  or  bill  of  exchange  is  only  the  representative  of  value, 
is  just  as  absurd  as  to  say  that  a  wooden  yard  measure  is  intrinsic  distance,  and 
that  the  space  between  two  points  a  yard  apart  is  the  representative  of  dis- 
tance. 
On  page  235  of  the  same  book  we  find  the  following: 
That  unfortunate  confusion  of  ideas  between  the  value  of  a  commodity 
being  the  quantity  of  another  commodity  it  will  purchase,  and  the  quantity 
of  labor  embodied,  as  it  were,  in  the  commodity  itself,  which  is  chiefly  owing 
to  Smith  and  adopted  by  Ricardo,  has  not  only  led  to  that  mischievous  ex- 
pression "intrinsic  value,"  the  source  of  endless  confusion  in  economics,  but 
also  to  the  search  for  something  which  very  slight  reflection  would  have 
shown  to  be  impossible,  namely,  an  invariable  standard  of  value. 

Aad  also  from  pages  230  and  231  of  the  same,  the  following: 

There  is  nothing  which  troubles  this  controversy  more  than  for  want  of 
distinguishing  between  value  and  virtue. 

Value  is  only  the  price  of  things,  and  that  can  never  be  certain,  because  it 
must  be  tUpre  at  all  times  and  m  all  places  of  the  same  value;  therefore  noth- 
ing can  have  intrinsic  value. 

But  things  have  an  intrinsic  virtue  in  themselves,  which  in  all  places  have 
the  same  virtue — the  loadstone  to  attract  iron,  and  the  several  qualities  that 
belong  to  herbs  and  drugs,  some  purgative,  some  diuretical,  etc.  But  these 
things,  though  they  may  have  great  virtue,  may  be  of  small  value  or  no  price, 
according  to  the  place  where  they  are  plenty  or  scarce;  as  the  red  nettle, 
though  it  be  of  excellent  virtue  to  stop  bleeding,  yet  here  it  is  a  weed  of  no 
value  from  its  plenty.  And  so  are  spices  and  drugs  in  their  own  native  soil 
of  no  value  but  as  common  shrubs  and  weeds,  but  with  us  of  great  value,  and 
yet  in  both  places  of  the  same  excellent  intrinsic  virtue. 

Senator  Jones,  in  addition  to  what  I  have  already  quoted  from 
him,  says  of  this  "  intrinsic- value  "  fallacy: 

Like  the  pillars  which  were  believed  to  support  the  earth,  this  intrinsic 
value,  whether  6t  gold  or  silver,  is  purely  imaginary.  Notwithstanding  the 
rejection  of  the  theory  by  all  well-informed  ecomomists,  it  continues  to  be  a 
refuge  for  ignorance  and  sciolism. 

In  the  whole  history  of  time  there  has  been  no  error  in  any  department  of 
thouhgt  that,  in  the  degree  of  contribution  to  the  martyrtom  of  man,  can 
compare  with  this  notion  of  "intrinsic  value."  Fully  refuted  and  rejected 
by  science,  the  theory  had  well  nigh  disappeared  from  economic  literature 
until  the  discovery  was  made  that  the  hold  which,  Uke  a  blighting  supersti- 
tion, it  had  obtained  on  the  ignorance  of  men  could  be  utilized  to  discredit 
silver  and  to  plume  the  single  gold  standard.  Immediately  the  teachings  of 
science  are  set  at  naught,  and  "intrinsic  value  "  is  declared  to  be  the  deter" 
minative  factor  in  the  discussion. 

mo 


80 

I  wholly  deny  the  existence  of  intrinsic  value,  whether  in  gold  or  any  other 
object.  ■ 

Professor  Jevons,  in  his  work  The  Mechanism  of  Exchange, 
says: 

Value,  like  utility,  is  no  intrinsic  quality  of  a  thing;  it  is  an  extrinsic  acci 
dent  or  relation. 

The  same  author,  in  his  work  upon  Political  Economy,  says: 

Value  implies,  in  fact,  a  relation;  but  if  so,  it  can  not  possibly  be  some  other 
thing.  A  student  of  economy  has  no  hoj)o  of  ever  being  clear  and  correct  in 
his  ideas  of  the  science  if  he  thinks  of  value  as  at  all  a  thing  or  object,  or  even 
as  anything  which  lies  in  a  thing  or  object.— T/ie  Tlieory  of  Political  Economy, 
page  82. 

In  his  essay  on  "Value  of  Gold  this  same  noted  political  econo- 
mist says: 
There  is  no  such  thing  as  intrinsic  value. 
Senator  Jones  quotes  John  Stuart  Mill,  as  follows: 

There  can  not,  in  short,  be  intrinsically  a  more  insignificant  thing  in  the 
economy  of  society  than  money. — Principles  of  Political  Economy,  Volume  II, 
page  23. 

And  then  says: 

Professor  Perry,  while  a  most  ardent  champion  of  the  gold  standard,  is  com- 
pelled to  admit  the  absurdity  of  the  expression  "  intrinsic  value,"  and  to  deny 
such  value  to  gold  as  well  as  to  everything  else.  In  reviewing  the  statements 
of  another  writer  on  the  subject  of  money,  who  had  used  that  term,  Professor 
Perry  says: 

"This  author  is  led  astray  by  the  worse  than  useless  adjective  'intrinsic,' 
having  never  yet  learned  that  there  is  only  one  kind  of  value  in  economics, 
namely,  purchasing  power." — Principles  of  Political  Economy,  page  341. 

Mr.  MacLeod,  in  his  elaborate  treatise  upon  the  Theory  and  Practice  of 
Banking,  speaking  of  the  expression  "intrinsic  value,"  says  : 

"  Moreover,  we  see  on  considering  the  term  value  that  it  is  nonsense  to 
speak  of  the  representative  of  value.  Value  is  a  ra^io— an  external  relation. 
What  can  be  the  representative  of  a  ratio,  or  of  an  external  relation?  To  say 
that  money,  becau.se  it  is  material  and  the  produce  of  labor,  has  intrinsic 
value,  and  that  a  bank  note  is  only  the  representative  of  value,  is  just  as 
absurd  as  to  say  that  a  wooden  yard  measure  is  intrinsic  distance,  and  that 
the  space  of  36  inches  between  two  points  is  representative  distance  It  is  of 
the  first  importance  to  economic  science  to  exterminate  this  unhappy  phrase 
'intrinsic  value,'  which  is  clearly  shown  to  be  a  contradiction  in  terms." — 
MacLeod,  Theory  and  Practice  of  Banking,  1,  50. 

Ricardo  (than  whom  no  financial  authority  stands  higher)  lays  down  the 
principle  that  oven  paper  money,  having  not  a  shred  of  what  the  gold- 
standard  advocates  call  "intrinsic  value,"  will  have  real  value  equal  to  that 
of  gold  money,  provided  the  number  of  the  notes  be  sufficiently  limited  in 
quantity. 

Speaking  of  uncovered  paper  money,  he  says: 

"By  limiting  its  quantity  its  value  in  exchange  is  as  great  as  an  equal  de 
nomination  of  coin,  or  of  bullion  in  that  coin". — Political  Economy  and  Taxor 
tion,  chapter  27. 

After  further  discussion  of  the  subject,  he  continues: 

"  On  these  principles  it  will  be  seen  that  it  is  not  necessary  that  paper 
1770 


SI 

money  slioiiM  be  payable  in  specie  to  secure  its  value;  it  is  only  necessary 
that  its  quantity  be  regulated  according  to  the  value  of  the  metal  which  is 
declared  to  be  the  standard."    (Same  work  and  chapter.) 

In  other  words,  Ricardo's  statement  here  is,  that  if  the  amount  of  irredeema- 
ble paper  money  in  a  country  were  jiist  equal  to  the  amount  of  gold  which 
would  form  that  country's  distributive  share  of  the  gold  money  of  the  world, 
the  paper  money  would  have  precisely  the  same  value,  dollar  for  dollar,  as 
would  an  equal  amount  of  gold  in  that  country. 

All  these  writers  and  many  others  declare  that  the  value  of  money— other 
things  being  equal— depends  on  its  quantity  and  not  on  its  material.  It  is 
therefore  absurd  to  claim  that  silver  has  ceased  to  be  adaptable  for  the  money 
use  because  it  is  said  to  have  lost  some  supposed  attribute  that  neither  silver 
nor  gold  nor  anything  else  ever  possessed,  namely,  intrinsic  value. 

So,  too,  the  value  of  the  units  or  dollars  of  our  current  money 
is  not  intrinsic  value,  since  value  can  not  be  intrinsic  in  anything 
but  the  value  of  a  dollar,  or  the  unit  of  any  system  of  money  is  in 
its  exchangeability,  and  measured  by  its  purchasing  or  exchange- 
able power  in  commodities,  and  is  constantly  related  to  the  quan- 
tity, whole  number,  volume,  or  aggregate  supply  of  units  or  dollars 
in  circulation.  Its  purchasing  power  or  value  may  be  great  or 
small — great  if  the  volume  or  supply  of  them  is  small,  and  of  small 
value  if  the  volume  is  great  relatively  to  the  quantity  of  exchange- 
able things — commodities — to  be  exchanged  for  them. 

Money  or  the  units  of  money  have  no  intrinsic  value  but  relative 
value  only. 

Money  is  not  a  natural  thing  nor  the  natural  property  or  quality 
of  anything,  but  is  constituted  or  decreed  by  custom,  convention, 
or  law. 

All  money  is  the  creation  of  law. 

If  it  existed  otherwise  than  by  law  it  could  not  be  demonetised 
by  law.  Those  who  talk  about  money  existing  otherwise  than  by 
force  of  law  in  any  legalized  and  civilized  nation  are  either  knaves 
or  they  are  ignorant  of  what  constitutes  money. 

While  on  this  work  of  exposing  the  fallacy  in  the  theory  of  the 
money  power  that  gold  and  silver  money  is  money  because  of  in- 
trinsic value,  on  the  testimony  of  Ricardo,  as  quoted  by  Senator 
Jones,  and  so  ably  commented  upon  by  him,  I  wish  to  call  atten- 
tion to  the  point  that  has  such  an  important  bearing  on  the  ques- 
tion of  paper  money  to  be  issued  elastically  by  the  banks  if  this 
bill  shall  pass. 

He  points  out  clearly  that  uncovered  paper  money  such  as  our 
bankers  spit  at  with  svich  terms  as  "irredeemable  trash,"  "money 
founded  on  nothing,"  etc.,  will  have  "value  as  great  by  limiting 
its  quantity  as  an  equal  denomination  of  coin  or  of  bullion  in  that 
coin." 

Eicardo  does  not  stop  with  this  statement.    He  says: 

On  these  principles  it  will  be  seen  that  it  is  not  necesary  that  paper  money 
should  be  payable  in  specie  to  secure  its  value. 
1770 6 


82 

He  is  demolishing, it  would  seem, all  the  pet  sophisms  of  "in- 
trinsic value  money  "  and  ' '  coin  redemption  money  "  of  the  Wall 
street  advocates  at  once  and  emphasizing  what  I  have  tried  here- 
tofore on  this  floor  to  point  out  to  my  fellow-members,  that  quan- 
tity of  cun-ency  in  circulation  regulates  and  controls  the  value  of 
money  without  regard  to  the  material  of  which  the  money  is  com- 
posed, and  also  that  redemption  of  one  kind  of  a  legal-tender  dol- 
lar in  coin  or  any  other  kind  of  a  dollar  is  not  necessary  to  main- 
tain the  value  of  money.  Note  how  Ricardo  goes  on  to  say  that 
'"it  is  only  necessary  that  its  (uncovered  paper  money)  quantity 
be  regulated  according  to  the  value  of  the  metal  which  is  de- 
clared to  be  the  standard." 

It  must  be  an  annoyance  to  the  advocates  of  bank  issues  and 
gold  standard  and  intrinsic  value  money  theories  to  find  that 
fundamental  principles,  historic  examples,  and  the  best  authorities 
are  constantly  furnishing  evidence  against  them. 

GOVERNMENT  PAPER  MONET  THE  HIGHEST  ACHIEVEMENT  OF  WISDOM. 

My  position  is  that  the  regulation  and  control  of  the  quantity 
of  currency  in  circulation  is  of  supreme  importance,  and  that 
therefore  it  must  not  be  turned  over  to  banking  corporations  or 
any  other  private  interests. 

The  Government  alone  must  retain  and  constantly  exercise  con- 
trol over  the  volume  of  all  kinds  of  money  permitted  to  circulate 
as  money  among  the  people  so  to  maintain  general  prices  and  the 
equity  of  pajonent  on  all  future  obligations. 

Since  the  coinage,  if  unlimited,  either  for  one  or  both  metals,  is 
slightly  automatic  as  to  quantity  and  may  vary  with  the  produc- 
tion, the  export,  the  import,  and  the  consumption  of  these  metals 
in  the  arts,  and  therefore  the  quantity  may  vary,  to  the  ruin  of 
prices  and  bankruptcy  of  debtors  v^athout  some  compensating 
balance,  therefore  I  see  in  paper  money  the  highest  achievemeHt  of 
wisdom;  for  by  issuing  it  through  the  authority  of  Government, 
the  aggregate  volume  of  money  in  circulation  can  both  be  con- 
trolled and  rendered  adequate  for  the  progressive  march  of  indus- 
try and  ciWlization. 

The  remonetization  of  silver  has  its  chiefest  benefits  in  breaking 
the  monopoly  of  the  Anglo-American  gold  conspiracy  by  increas- 
ing to  some  degree  the  volume  of  money  so  as  to  relieve  price  de- 
pression and  the  ruin  of  debtors.  We  can  thus  double  the  volume 
of  coin  redemption  money  so  as  to  better  secure  our  redemption 
system  of  money  from  collapse  so  long  as  the  Jewish  trick  and 
scheme  of  "coin  redemption"  shall  be  followed  foolishly  by  man- 
kind. We  thus  render  ourselves,  by  free  coinage  of  silver,  more 
independent  of  gold  exports  and  appreciations  during  the  mad , 
scramble  of  the  nations  in  effort^s  to  maintain  the  gold  standard, 
1770 


83 

That  it  would  cheapen  money  is  possibly  its  first  effect,  and 
this  would  be  curative  or  remedial,  and  would  save  the  industrial 
world  from  further  extortion  and  ruiu  at  the  hands  of  the  money 
power  that  for  many  years  has  been  appreciating  money  and 
rendering  it  so  dear  that  ruin  has  been  greater  among  all  western 
nations  than  could  have  been  wrought  by  invasion  either  of  armed 
forces  or  Asiatic  cholera. 

A  PROPER  AMERICAN  SYSTEM  OP  MONEY  NECESSARY. 

As  to  the  effect  of  our  legislation  regarding  silver  on  the  other 
nations,  let  me  say  that  we  should  keep  in  mind  the  effect  of  money 
legislation  on  our  own  country.  We  must  legislate  for  America, 
not  Europe.    Senator  Jones  of  Nevada  has  well  said: 

It  is  one  of  the  inalienable  rights  of  a  free  people  to  provide  themselves  with 
a  sufficient  and  properly  regulated  money  system,  regardless  of  the  systems 
prevailing  in  countries  of  less  enlightenment,  or  in  which  the  rights  and  in- 
terests of  the  people  are  subordinated  to  the  cupidity  of  money  lenders  and 
privileged  classes. 

But,  to  say  a  brief  word  on  effect  of  free  coinage  of  silver  by  our 
nation  upon  other  nations,  I  will  state  that  it  will  cheapen  gold 
and  raise  silver  all  over  the  world,  and  that  almost  instantly. 

Relieving  the  undue  strain  that  now  exists  on  gold  by  injecting 
silver  as  fast  as  our  mints  could  coin  it  into  the  metallic  money  of 
our  country  would  at  once  show  to  Europe  that  we  would  no 
longer  pursue  a  blind  competition  with  them  for  gold.  It  would 
at  once  make  a  new  valuation  of  gold  in  relation  to  silver  and  all 
other  commodities  throughout  Europe,  and  even  in  China  and  In- 
dia. 

If  silver  displaced  gold  in  our  coinage  so  much  as  to  permit  the 
flow  of  a  single  hundred  millions  of  gold  to  Europe  it  would  so 
far  enlarge  their  supply  and  raise  prices  all  through  the  countries 
where  we  now  have  to  sell  on  prices  ruinously  low.  Silver,  on 
the  other  hand,  would  rise  to  our  mint  price,  $1.29  per  ounce,  in 
every  market  of  Europe  and  the  Orient.  I  quote  the  Senator  from 
Nevada  again— page  395,  speech  of  October,  1893: 

I  must  here  repeat  that  there  is  no  ground  whatever  for  supposing  that  in 
case  of  the  remonetization  of  silver  in  this  country  all  the  silver  of  the  world 
would  be  sent  here. 

As  quickly  as  the  telegraph  could  convey  the  news  that  the  United  States 
had  fully  remonetized  silver,  that  metal  would  command  $1.39  an  ounce  in 
every  market  in  the  world.  As  I  have  said,  there  is  no  silver  bullion  in  the 
markets  of  the  world  to  exceed  25,000,000  ounces,  if  so  much.  Such  silver  as 
may  exist  in  any  market  would  not  need  to  come  to  the  United  States,  be- 
cause when  men  knew  they  could  get  $1.29  for  it  by  sending  it  here  they  would 
not  part  with  it  for  less. 

"We  have  a  demonstration  of  this  in  the  fact  that  when  in  1800  there  was 
some  expectation  that  a  free-coinage  bill  might  become  a  law  in  this  country, 
1770 


84 

and  silver  rose  in  consequence  to  $1.20  an  ounce,  it  rose  to  that  price  not  in 
the  AnuM-ican  market  alone,  but  in  every  market  of  the  world  that  had  any 
silver  bullion  for  sale. 

When  it  is  said  that  the  hoards  of  silver  in  India  would  come  here  to  be 
exchantjed  for  gold  there  is  not  the  slightest  foundation  in  reason  for  such  a 
supiH>sition.  Gold  is  not  the  money  of  the  280,000,000  people  of  India,  and  it 
is  impossible  to  conceive  that  it  ever  can  be.  The  romonetization  of  silver 
simply  means  that  with  silver  freely  admitted  to  the  mints  gold  would  fall 
in  relation  to  silver. 

Yet  let  me  say  that  silver  coinage  alone  is  not  sufficient  for  the 
protection  of  our  people.  Metals  are  always  subject,  more  or  less, 
to  go  and  come  by  export  and  import. 

Paper  money  must  be  also  issued  and  added  to  give  adequate 
volume  and  steailiness  of  value  to  our  currency,  and  its  highest 
utility  will  be  found  when  issued  by  the  Government  to  supple- 
ment the  volume  of  specie  and  used  to  maintain  adequacj'  and 
uniformity  of  circulating  volume.  If  metallic  money  becomes 
relatively  scarce  by  export  or  otherwise,  let  the  deficiency  be  sup- 
plied by  Government  issues  to  prevent  contraction  of  the  aggre- 
gate volume  of  coin  and  paper  in  cu-culation  and  to  keep  up  an 
increase  of  money  to  accord  with  the  increase  of  population  and 
business. 

If  by  balances  of  trade  or  from  other  sources  there  should  come 
too  great  an  addition  of  coin  tot)ur  ciirrency  so  as  to  raise  prices  too 
high  and  do  injustice  to  the  creditor  class  of  our  people,  then  let 
the  Government  withdraw  and  cancel  enough  paper  money  or 
notes  to  keep  the  aggregate  volume  at  a  proper  equilibrium. 

This  would  be  wisdom  in  financial  legislation. 

This  would  secure  justice  regarding  debts. 

This  would  maintain  prices  and  profits. 

This  would  insure  prosperity. 

This  would  protect  the  people. 

But  to  secui-e  these  results  we  must  recognize  the  right  of  the. 
Government  to  issue  Treasury  notes  and  to  make  them  full  money 
or  legal  tender. 

We  must  insist  on  the  value  of  money  always  dependent  on  vol- 
ume, being  regulated  by  Congress  and  Congress  must  represent 
the  highest  good  of  the  people. 

Congress  shall  have  power  to  coin  money  and  regulate  the  value 
thereof. 

This  is  our  constitutional  power  and  duty,  and  we  know  that 
there  is  no  way  to  regulate  the  value  of  money  except  by  regulat- 
ing the  quantity  or  volume.  To  give  the  power,  "  elasticity,"  of 
controlling  the  volume  over  to  banking  corporations  is  to  betray 
our  people. 
1770 


85 

DO    BANKING    COKPORATIONS    STAND    HIGHER    THAN    SOVEREIGN    GOVERN- 
MENT? 

From  what  sources  have  banks  received  a  higher  power  or  right 
of  isstie  than  is  held  by  the  Government  itself? 

It  is  in  vain  for  the  bank  syndicate  to  cry  out  against  Govern- 
ment issues  of  paper  money  on  the  theory  that  the  Government  has 
insufficient  power  to  issue  and  legalize  paper  money  while  banks 
have  power  to  do  it  or  can  obtain  the  power  to  do  it  by  law. 

What  arrogance  for  them  to  assume  that  the  Government  can 
by  law  bestow  upon  the  banks  a  right  to  issue  money  while  not 
itself  possessing  the  right! 

What  stupidity  for  them  to  teach  that  they  are  greater  than  the 
Government! 

What  ignorance  or  deception  for  them  to  insist  that  paper  money 
issued  by  the  Government  is  any  more  fiat  money  than  what  they 
would  issue  by  fiat  of  law  supplemented  by  the  fiat  of  the  banks! 

We  say  again,  there  is  no  money  in  nature.  Money  is  an  artifice 
of  man  and  the  creation  of  law. 

Any  money  issued  vdthout  the  authority  or  decree  or  fiat  of  the 
sovereign  Government  is  counterfeit  and  fraudulent,  and  the  is- 
suers of  such  money,  whether  of  paper  or  coin,  should  be  appre- 
hended, and,  if  found  guilty,  should  be  punished  accordingly. 

In  my  speech  on  Money,  Banks,  and  Debts  of  the  World  while 
the  bill  for  the  repeal  of  the  tax  on  State-bank  issues  was  pend- 
ing I  endeavored  to  make  this  the  legal  basis  of  money  clear 
But  to  what  I  then  said  I  shall  add  additional  authorities  on  this 
occasion  so  as  to  clear  away  all  doubts  on  the  matter. 

MONEY  EXISTS  BY  LAW  AND  NOT  BY  NATURE. 

Henry  Cernuschi  was  perhaps  the  ablest  scholar  that  appeared 
before  the  monetary  commission  of  our  own  country  in  1877. 

He  defines  money  and  speaks  of  it  as  follows: 

I  will  give  you  my  definition  of  money:  Money  is  a  value  created  by  law  to 
be  a  scale  of  valuation  and  a  valid  tender  for  payments. 

*  *  *  *  »  *  * 

Certainly  everyone  imderstands  that,  as  regards  paper  money,  the  value 
is  created  by  law;  but  it  is,  perhaps,  not  easy  for  everyone  to  admit  that, 
with  regard  to  metallic  money  also,  the  value  is  created  by  law.  It  is,  how- 
ever, the  fact.  If  you  suppose  that  gold  is  not  money,  is  not  legal  tender— if 
you  suppose  that  silver  is  not  money,  is  not  legal  tender— the  value  of  gold 
-and  the  value  of  silver  is  lost. 

******* 

This  fact  that  money  is  a  value  created  by  law  is  one  of  great  importance, 
and  I  can  cite  you  the  highest  authorities  in  proof  that  what  I  say  is  true. 

When  this  question  was  put  to  the  wdtness — 

Q.  Supposing  the  gold  and  silver  metals  to  have  no  other  use  than  as 
money,  would  they  then  maintain  the  same  value  that  they  now  maintain  as 
money? 
1770 


86 

He  answered — 

A.  There  would  be  a  dimimition  of  their  purchasing  power,  because  tha 
pnrchasinff  power  of  money  is  in  direct  proportion  to  the  volume  of  money 
existing-  It  all  K"'ld  and  silver  are  used  solely  as  money,  all  the  ornaments 
and  all  the  jewelry  will  be  melted  and  coined,  and  the  volume  of  money  will 
be  increased.  It  will  be  exat;tly  as  it  a  new  mine  of  money  had  been  opened. 
And  the  volume  of  circulating  money  being  made  larger  than  before,  there 
will  be  a  corresponding  diminuti(jn  in  the  purchasing  power  of  every  metallic 
dollar. 

Again  he  says: 

Mr.  Chairman,  the  doctrine  that  money  is  a  value  created  by  law  was  pro- 
mulgated twenty-two  centuries  ago.  It  was  advanced  by  Aristotle,  the  great 
phDosopher— is  practical  and  so  positive  that  I  would  dare  call  him  an  Amer- 
ican philosopher.    I  quote  from  his  writings: 

"Money  (nomisma  in  Greek)  by  itself  is  but  a  frivolity,  a  futility,  a  trifle, 
and  has  value  only  by  law  (nomos  in  Greek),  and  not  by  nature,  so  that  a 
change  of  convention  between  those  who  use  it  is  sufficient  to  deprive  it  of 
all  its  value  and  power  to  satisfy  all  our  wants.    (PoUtica.)" 

In  virtue  of  a  voluntary  convention,  money  (nomisma)  has  become  the  me- 
di\im  of  exchange.  We  say  "nomisma,"  because  it  is  not  so  by  nature,  but 
by  law  "nomos,"  and  because  it  is  in  our  power  to  change  it  and  to  render  it 
useless.    (Ethica.) 

There  is  great  weight  attached  to  what  that  great  economic 
writer  Henry  Dunning  MacLeod  may  say,  and  rightfully  so,  when, 
he  is  not  a  special  pleader,  as  in  his  recent  article  against  silver. 

In  his  Principles  of  Economic  Philosophy,  volume  3,  page  346, 1 
find  that,  after  approving  some  things  John  Law  has  said,  he  quotea 
this  from  Law:  "Any  goods  that  have  the  qualities  necessary  in 
money  (by  which  he  means  the  commodity  value  of  the  thing) 
maybe  made  money  equal  to  their  value." 

"  In  this  sentence,"  Macleod  goes  on  to  say,  as  I  have  quoted  him 
already  while  speaking  on  the  nature  of  money, ' '  is  concentrated  the 
whole  essence  of  that  eternal  delusion  *  *  *  which  we  desig- 
nate Lawism.  It  is  indeed  nothing  but  the  stupendous  fallacy  that 
money  represents  commodities.  No  man  who  does  not  thoroughly 
understand  the  great  fundamental  principle  established  by  Tur- 
got  and  others,  that  money  does  not  represent  commodities,  can 
ever  have  sound  ideas  on  this  subject.  Money  does  not  rexn-esent 
commodities  at  all,  but  only  debt  or  services  due  which  have  not 
yet  received  their  eciuivalent  in  commodities." 

SOVEREIGN    GOVERN.MENT.S,   NOT  BANKS,  SHOULD  ISSUE  ALL  MONEY. 

On  the  general  proposition  of  permitting  banking  corporations 
to  issue  currency  and  expand  and  contract  volume  and  the  prices 
of  all  things  that  money  measures  or  prices  or  values  at  their  own 
option,  I  desire  to  support  my  general  arguments  against  it  by 
referring  to  some  great  names  and  authorities  under  the  general 
heading 
1770 


87 

SHOULD  BANKS  BE  ALLOWED  TO  ISSUE  CURRENCY? 

The  money  power  are  doing  tlieir  utmost  to  establish  the  claim 
by  constant  assertion,  for  they  have  no  argument  in  the  case  that 
the  Government  should  as  they  call  it,  "go  out  of  the  business  of 
banking."  In  this  they  are  begging  the  question  by  a  misuse  of 
terms,  for  issuance  of  circulating  notes  is  no  proper  function  or 
duty  of  banks  any  more  than  coining  money  is  the  duty  of  banks 
instead  of  the  National  Government. 

The  legitimate  business  of  banking  is  to  deal  in  exchange,  loans, 
and  deposits. 

The  Government  should  indeed  keep  out  of  this,  but  the  legiti- 
mate and  constitutional  duty  of  the  National  Government  under 
our  Constitution  is  to  coin  and  issue  all  money  needed  for  circula- 
tion and  regulate  its  value  by  the  only  method  possible,  which  is 
to  regulate  and  control  its  volume. 

Daniel  Webster,  who  has  been  so  greatly  eulogized  within  the 
last  few  days  in  this  House,  on  the  occasion  of  unveiling  his  statue, 
said  of  paper-money  circulation: 

Its  regulation  naturally  belongs  to  the  hands  which  hold  the  power  over 
coinage.    This  is  an  admitted  maxim  by  all  writers. 

The  plea  of  the  advocates  of  bank  issues  instead  of  Government 
issues  of  paper  money  rests  largely  upon  these  points,  which  they 
say  are  essential  in  a  sound  currency  and  can  be  furnished  by  the 
banks — 

First.  Security  of  final  redemption. 

Second.  Convertibility. 

Third.  Elasticity. 

On  this  third  point  I  have  already  shown  that  elasticity  such  as 
they  mean,  which  disturbs  the  volume,  disturbs  prices  and  profits 
and  these  must  not  be  under  private  control. 

The  first  two  rest  on  the  deliision  that  it  is  in  money  roatters 
safer  to  have  representatives  of  money  in  circulation — credit  sub- 
stitutes, as  they  call  them — than  to  have  legal-tender  money  itself 
in  circulation. 

Of  course  the  idea  that  substitutes  for  legal-tender  money  are 
better  than  the  money  itself  is  a  snare  and  a  delusion. 

The  whole  theory  of  compulsory  coin  redemption  of  money  is 
wrong  to  those  who  will  take  the  trouble  to  investigate. 

The  old  economists  did  not  have  the  benefit  of  full  light  and 
liberty  on  a  qiiestion  of  a  properly  discovered  system  of  legal- 
tender  paper  money  isstied  and  controlled  by  the  Government,  in- 
dependent of  the  coming  or  going  of  gold,  nor  did  all  the  fathers 
of  our  own  Republic  prior  to  the  issuance  of  the  greenback  prop- 
erly discern  the  idea  that  money  is  wholly  a  creature  of  law.  But 
1770 


88 

they  bad  no  doubt  as  to  the  effect  of  volume  on  prices,  and  there- 
fore generally  took  ground  against  bank  issuance. 

But  General  Warner,  from  whom  I  have  already  quoted,  in  his 
testimony  and  statements  before  the  committee  says,  on  page  245: 

Artiug  upon  this  principle,  the  business  of  banking  and  the  creation  of 
money  are  so  distinct  and  separate  in  their  nature  that  they  can  not  be  safely 
blended. 

I  siiy  that  all  enlightened  nations  have  abandoned  the  practice  of  turning 
over  the  issue  and  regulation  of  currency  to  an  indefinite  number  of  banks. 
It  was  stated  yesterday  before  the  committee  that  the  three  things  neces- 
sary to  a  sound  currency  were,  first,  security;  second,  convertibility  as  a 
means  of  regulation,  and  third,  elasticity.  Now,  I  wish  to  refer  to  these  three 
principles  briefly  in  their  order.  First,  security.  One  of  the  earliest  Secre- 
taries of  the  Treasury,  Crawford,  I  think,  and  I  have  not  had  time  to  look 
that  up,  sjiid  that  the  security  of  final  payment  of  notes  was  no  such  regula- 
tion of  quantity  as.  would  secure  stability  in  the  value  of  the  currency.  That 
saying  was  quite  extensively  quoted  in  the  British  discussions  on  that  ques- 
tion as  being  a  clear  statement  of  a  perfectly  sound  doctrine. 

Mr.  Cobb  of  Alabama.  Please  state  that  over  again. 

Mr.  Wahnek.  That  the  security  of  final  payment  of  notes,  or  their  re- 
demption, is  no  such  regulation  of  the  quantity  of  money  as  will  insure  sta- 
bility of  value,  and  the  reason  for  that  is  very  apparent.  The  United  States 
might  now  issue  $.5(X),000,U00  of  5  per  cent  bonds,  and  if  it  would  allow  banks 
to  take  these  bonds  at  par,  is  there  any  doubt  but  that  the  national  banks 
would  issue $500,000,000  of  currency,  or  as  much  as  they  are  allowed  bylaw  to 
issue?  The  ultimate  payment  of  the  notes  would  be  amply  secured— there 
would  be  no  question  about  that,  none  whatever— but  the  quantity  of  the 
currency  would  be  so  increased  that  its  value  would  become  immediately  de- 
preciated. 

At  first  the  depreciation  would  extend  not  only  to  the  paper  part  but  to  the 
coin  as  well,  involving  the  entire  currency  of  the  country  as  compared  with 
the  currency  of  other  countries;  hence  the  principle  of  ultimate  security  was 
abandoned  sixty  years  ago  as  a  principle  upon  which  the  regulation  of  the 
currency  could  be  safely  founded.  If  security  of  note  circulation  is  a  safe 
pi-inciple,  then  security  by  a  pledge  of  land  ought  to  be  as  good  as  a  pledge  of 
bonds.  John  Law  said :  '  'Any  goods  that  have  the  qualities  necessary  in  money 
maybe  made  money  equal  to  their  value." 

Mirabeau  said  of  the  French  assignats:  "  They  represent  real  property, 
the  most  secure  of  all  possessions,  the  land  on  which  we  tread."  The  funda- 
mental error  in  this  principle  lies  in  the  attempt  to  hold  a  thing  as  property 
and  at  the  same  time  to  coin  it  into  money.  At  bottom  the  principle  of  basing 
the  currency  on  bonds  is  just  as  vicious  as  basing  it  on  land.  There  is  no 
limit  to  the  amount  of  bonds  that  may  be  issued  any  more  than  for  the  land 
that  may  be  pledged,  nor  as  much;  but  the  principle  itself  is  wrong  for  the 
reason  that  security  of  final  payment  affords  no  proper  regulation  of  quantity 
upon  which  the  value  of  each  unit  depends. 

Ricardo,  in  his  evidence  before  the  secret  committee  of  the  House  of  Com- 
mons in  1819,  says: 

"Plans  for  an  improved  system  of  currency  are  frequently  laid  before  the 
public  which  rest  entirely  iipon  this  fallacy.  The  exclusive  object  of  these 
systems  is  to  obtain  for  the  paper  currency  to  be  issued  under  them  a  greater 
degree  of  security  than  that  which  is  supposed  to  attach  at  present  to  the 
notes  of  the  Bank  of  Entjiand.  This  end  the  authors  of  these  schemes  gener- 
ally propose  to  accomplish  by  contrivances  which  they  deem  to  be  extremely 
1770 


89 

ingenious,  but  whicli  always  resolve  themselves  into  the  simple  plan  of  making 
property  of  some  kind  or  other  the  basis  of  the  circulation.  Sometimes  the 
plan  suggested  proposes  to  issue  a  paper  currency  against  the  security  of  land, 
sometimes  against  the  security  of  the  public  debt,  and  sometimes  against  mer- 
chandise in  the  docks;  but,  having  provided  for  the  security  of  the  notes,  the 
plan  generally  terminates  at  this  point:  the  projector  apparently  conceiving 
that  he  has  satisfied  all  the  desiderata  of  a  good  paper  currency,  although  he 
has  introduced  no  specific  measure  for  regulating  the  amount  of  that  cur- 
rency and  maintaining  its  value  relatively  to  the  currencies  of  the  other  coun- 
tries of  the  world." 

The  second  principle,  as  a  means  of  regulation,  is  convertibility.  In  the 
bullion  report  of  1810  the  doctrine  seemed  to  be  conceded  that  if  a  currency 
was  convertible— although  the  report  stoutly  contended  against  the  doctrine 
that  ultimate  security  was  a  safe  principle  at  all  times— that  then  it  never 
could  fall  below  the  value  of  metallic  money,  or  of  the  metallic  standard;  and 
that  doctrine  was  held  and  acted  upon,  almost  without  dissent.  I  believe, 
until  1826.  But  the  experience  in  England,  after  resumption  in  1819,  up  to 
1826,  was  such  as  to  lead  to  a  very  careful  reexamination  of  that  principle, 
and,  although  the  directors  of  the  Bank  of  England  had  prior  to  that  time 
acted  upon  that  principle  and  considered  it  perfectly  safe,  they  were  obliged, 
as  Mr.  Norman  admitted,  to  abandon  that  principle. 

It  was  during  this  period,  from  1819  to  1826  and  on  to  1844,  that  the  question 
underwent  siich  a  thorough  discussion,  when  everything  was  thoroughly 
thrashed  out.  Every  suggestion  and  every  claim  was  ground  to  powder  and 
all  errors  sifted  out  and  the  truth  finally  established,  and  one  of  the  conclu- 
sions reached  was  that  even  convertibility  could  not  be  relied  upon  as  a  safe 
principle  for  the  regulation  of  the  amount  of  currency. 

There  were  those  even  before  1826  who  had  opposed  the  doctrine  that  either 
security  or  convertibility  could  alone  be  relied  upon  to  properly  regulate  the 
currency.    Mr.  Horner,  in  the  Bullion  Report  of  1810,  says: 

"An  increase  in  the  quantity  of  the  local  currency  of  a  particular  country 
will  raise  prices  in  that  country  exactly  in  the  same  manner  as  an  increase  in 
the  general  supply  of  precious  metals  raises  prices  all  over  the  world." 

Eicardo  says  (see  High  Price  of  Bullion) : 

'■It  would  be  readily  admitted  that  whilst  there  is  any  great  portion  of 
com  circulation,  every  increase  of  bank  notes,  though  it  will  for  a  short  time 
lower  the  value  of  the  whole  currency,  paper  as  well  as  gold,  yet  that  such 
depression  will  not  be  permanent,  because  the  redundant  and  cheap  currency 
will  lower  the  exchange  and  will  occasion  the  exportation  of  a  portion  of  the 
coin,  which  will  cease  as  soon  as  the  remainder  of  the  currency  shall  have  re- 
gained its  value  and  restored  the  exchange  to  par." 

Webster  said,  in  his  speech  on  the  subtreasury  bill,  March,  1838: 

"I  contend  even  that  convertibility,  though  itself  indispensable,  is  not  a 
certain  and  unfailing  ground  of  reliance.  There  is  a  liability  to  excessive 
issues  of  paper,  even  while  paper  is  convertible  at  will;  of  this  there  can  be 
no  doubt.  Where,  thjen,  shall  a  regulator  be  found?  What  principle  of  pre- 
vention may  we  rely  upon?" 

J.  R.  McCullough  says: 

"  When  the  currency  of  any  particular  country,  as  of  England,  consists 
partly  of  tne  precious  metals  and  partly  of  paper  converted  into  them  *  *  * 
the  excess  of  paper  is  not  indicated  by  depreciation  or  fall  in  the  value  of 
paper,  as  compared  with  gold,  but  by  a  depreciation  of  value  in  the  whole 
currency,  gold  as  well  as  paper,  as  compared  with  other  States." 

Lord  Overstone  said,  in  his  testimony  before  the  commission  of  1875,  page 
408: 

1770 


00 

" Convertilile  notes  may  he  issued,  contiiuially  depreciating  the  currency, 
until  the  metallic  portion  of  the  currency  has  been  entirely  banished  from 
the  country." 

On  the  following  page  he  says: 

"The  changes  in  the  amount  and  value  of  the  paper  currency  of  the  United 
States  have  been  greater  than  in  any  other  country,  and  it  has  produced  an 
unprecedented  amount  of  bankruptcy  and  ruin." 

And  again,  page  41,  he  says: 

"It  is  undoubtedly  true  that  convertibility  is  an  ultimate  security  against 
a  permanent  excess  of  the  currency,  and  fixes  a  limit  beyond  which*such  ir- 
regularity in  its  management  can  not  be  carried.  But  this  principle  only 
comes  into  operation  through  the  medium  of  prices.  If  the  currency  be  in 
excess,  prices  of  all  articles  are  affected  in  a  corresponding  degree;  hence  the 
balance  of  trade  is  disturbed,  the  exchanges  are  consequently  affected,  and  a 
tendency  is  produced  to  export  gold.  *  *  *  Convertibility  will  not  by 
itself  prove  a.suflScient  protection  against  excess  in  a  paper  currency." 

And  in  his  pamphlet  on  the  management  of  the  circulation  previous  to  1839, 
he  says: 

"  It  is  not  sufficient  merely  to  ordain,  as  Peel's  bill  did.  the  convertibility  of 
the  notes:  it  is  further  necessary  to  see  that  effectual  means  are  provided  for 
that  end.  It  is  now  discovered  that  there  is  a  liability  to  excessive  issues  of 
paper,  even  while  that  paper  is  convertible  at  vcill." 

The  next  principle  is  that  of  elasticity.  They  say  we  must  have  an  elastic 
currency.    The  Secretary  of  the  Treasury  says: 

"A  sound  and  elastic  currency,  capable  of  adjusting  its  volume  easily  and 
rapidly  to  the  actual  demands  of  legitimate  business,  is  what  the  common 
interest  of  all  our  people  rerjiiires." 

I  say  to  the  Secretary  of  the  Treasury  that  perpetual  motion  is  a  great  deal 
easier  to  obtain  than  that  kind  of  elasticity.  It  never  did  exist  in  the  world 
ana  it  never  can.  There  is  absolutely  no  such  relation  between  the  supply  of 
paper  money  and  the  uses  for  money  as  admit  of  aiitomatic  regulation,  and 
for  a  single  reason.  If  paper  money  was  issued  only  to  meet  the  demands  of 
business  ai'ising  out  of  an  increased  number  of  transactions— that,  is  increased 
purchases  and  sales  of  goods— then  such  a  principle  might  be  possible;  but 
the  fact  is  the  effect  of  an  excessive  currency  is  immediately  to  raise  prices, 
and  as  prices  rise  the  demand  for  money  increases  pari  passu  with  the  rise  of 
prices,  and  when  prices  are  doubled  the  demand  for  $2  in  every  transaction 
is  just  as  great  as  the  demand  for  $1  was  before. 

Mr.  Hall.  Does  that  principle  apply  to  bank  ciirrency? 

Mr.  Warner.  Certainly,  to  bank  currency  as  well  as  to  any  other,  as  I 
will  show  you  a  little  further  on;  it  applies  to  any  currency  that  is  issued  in 
excess,  I  care  not  what  kind  of  currency  it  is.  It  would  apply  to  the  precious 
metals  if  there  was.  at  any  time,  such  a  production  of  the  precious  metals  as 
would  gi-eatly  increase  the  proportion  of  metallic  money  to  commodities  to 
be  bought  and  sold  or  to  be  circulated  by  money,  then  the  rise  of  prices  that 
would  follow  would  create  an  enlarged  demand  for  money.  Rising  prices 
never  take  up  and  give  back.  They  take  up  and  hold.  The  experience  of  the 
whole  world  is  against  the  idea  that  business  takes  up  money  and  gives  it 
back  automatically. 

Our  experience  under  the  old  bank-note  system  is  enough  to  set  that  at 
rest.  One  single  fact  is  enough.  Between  1830  and  1837  the  notes  of  the  banks 
of  this  country  increased  from  ?61. 000,010  to  «:149.fXi0,0fHJ,  and  then  they  went 
down  until,  in  1843  there  were  only  ^'iU)(K).()0()  of  them.  That  was  the  way  an 
elastic  currency  worked  then,  and  it  is  the  way  it  always  worked.  It  is  the 
way  it  worked  in  England  when  they  had  much  more  rigid  restrictions  than 
■we  ever  had  in  this  country. 
1770 


91 

An  elastic  currency!  It  is  a  delusion.  By  wnat  principle  are  banks  gov- 
erned, or  will  they  be  governed,  if  we  tiirn  over  to  tliem  the  issue  and  regula- 
tion of  the  currency?  I  ask  that  qixestion.  Banks  are  institutions  organized 
for  private  gains.  They  are  controlled  by  one  principle  alone— their  own  ia- 
terest.  If  they  can  derive  a  profit  by  putting  out  more  currency,  they  will 
put  it  out.  There  is  no  limit  to  the  quantity  of  money  they  would  put  out  or 
that  the  country  would  take. 

On  this  question  of  elasticity  let  me  read  from  the  Bullion  Report. 

Mr.  Hall.  What  bullion  report? 

Mr.  "Warner.  Of  1810,  the  Horner  report,  the  famous  bullion  report. 

As  far  back  as  the  Bullion  Report  of  1810,  Mr.  Whitmore,  then  late  governor 
of  the  Bank  of  England,  stated  the  rule  of  the  bank  then  to  be  "  to  govern  its 
issues  by  the  amounts  of  good  paper  offered  for  discount,  on  the  principle 
that  the  public  will  never  call  for  more  than  is  absolutely  necessary  for  their 
wants."  This  is  what  the  Secretary  of  the  Treasury  seems  now  to  think  a 
safe  principle— that  is,  business  will  not  call  for  any  more  money  than  it 
wants,  and  banks  will  not  put  out  any  more  than  business  calls  for.  But,  re- 
ferring to  this  principle,  the  Bullion  Report  says: 

"  That  this  doctrine  is  a  very  fallacious  one,  your  committee  can  not  enter- 
tain a  doubt.  The  fallacy  upon  which  it  is  founded  lies  in  not  distinguishing 
between  an  advance  of  capital  to  merchants  and  an  additional  supply  of  cur- 
rency to  the  general  mass  of  circulating  medium."    (Bullion  Report,  page  55.) 

Lord  Overstone.  in  his  testimony  before  the  commission  of  1857,  says,  page 
364,  "  the  public  will  call  for  and  take  money  to  any  extent " — there  is  no  fear 
of  that;  and  again,  on  page  365: 

"I have  no  hesitation  in  saying  that  the  Bank  of  England  can  put  out  any 
quantity  of  its  notes  that  it  thinks  proper;  that  the  effects  of  that  will  be  to 
drive  gold  out  of  the  country;  that  the  notes  will  take  the  place  of  gold  in 
the  circulation,  and  that  will  go  on  until  the  whole  of  the  gold  has  been 
driven  out  of  the  country." 

Sir  Charles  Wood  said,  discussing  the  act  of  1844: 

"It  was  held  in  the  bank  parlor,  as  it  is  by  many  even  now.  that  to  issue 
paper  on  good  commercial  security  was  all  that  was  necessary  to  insure  the 
proper  amount  of  paper  being  in  circulation." 

That  idea,  however,  long  ago  was  abandoned  in  England,  but  it  seems  still  to 
hold  a  place  in  this  country. 

Mr.  Warner.  As  Mr.  Weguelin  said,  the  wealth  of  the  world  is  offered 
against  money.  A  distinction  must  be  drawn  between  borrowing  money  and 
buying  money.  Money  on  the  one  hand  stands  offered  against  everything, 
and  everything  on  the  other  hand  stands  offered  against  money.  Money  will 
go  out  and  continue  to  go  out  as  prices  rise,  and  as  prices  rise  and  confidence 
increases  the  demand  for  money  increases,  and  there  is  no  principle  of  elas- 
ticity which  operates  until  the  point  of  explosion  is  reached.  This  is  reached 
when  gold  begins  to  go  oiit,  or  somiich  of  it  goes  that  confidence  is  destroyed; 
then  paiiic  follows  and  there  must  be  a  contraction  all  along  the  line.  It  is  a 
contraction,  however,  after  the  explosion,  and  that  is  the  way  such  a  cur- 
rency is  regulated  and  always  has  been. 

The  experience  of  every  country,  I  think,  has  been  the  same;  that  is,  first 
an  expansion,  then  a  sudden,  violent,  and  ruinous  contraction.  That  is  the 
necessary  consequence  of  a  currency  the  issue  of  which  is  left  to  the  discre- 
tion of  those  issuing  it  or  to  their  interest.  It  was  shown  in  report  of  1857  of 
the  commission  that  even  the  205  country  banks  of  England  could  not  be  in- 
trusted with  the  responsibility  of  issuing  circulating  notes.  Sir  Robert  Peel 
said  on  that  point : 

"It  appears  to  me  that  we  have,  from  reasoning,  from  experience,  from  the 
1770 


92 

admissions  made  by  the  issuers  of  paper  money,  .abundant  ground  for  the 
conclusion  that  under  a  system  of  unlimited  competition,  although  it  be  con- 
trolled by  convertibility  into  coin,  there  is  not  an  adequate  security  against 
the  excessive  issue  of  promissory  notes." 

Now,  take  the  10,000  banks  in  the  United  States,  and  delegate  the  power  to 
all  of  them  to  issue  notes,  and  entrust  to  them  the  duty  of  regulating  the  cur- 
rency of  the  country.  What  will  be  the  result?  When  will  they  begin  con- 
tracting? Not  until  the  issue  of  money  ceases  to  be  profitable  to  themselves. 
The  drain  of  gold  will  fall  first,  of  course,  upon  the  banks  of  the  seaboard, 
the  great  cities.  They  may  check  their  issues,  but  the  country  banks  will  pay 
no  attention  to  that.  Inflation  will  go  on  long  after  the  gold  begins  to  leave 
the  country.  Why,  the  idea  of  maintaining  a  gold  standard  under  a  system 
of  currency  of  that  kind  is  so  at  variance  not  only  with  the  experience  of 
every  nation  in  the  world  but  of  reason,  that  I  am  astonished  that  such  a 
proposition  as  this  should  be  brought  forward  at  all. 

Compare  this  with  the  restriction  system  of  England,  Germany,  and  other 
European  countries.  What  other  country  would  even  for  a  moment  enter- 
tain a  proposition  to  turn  over  the  issue  and  regrulation  of  currency  to  10,000 
banks?  Indeed,  it  is  a  proposition  too  monstrous  for  anybody  to  consider  and 
maintain  mental  equanimity.  If  the  author  of  this  scheme  had  ever  read  the 
discussion  on  the  subject  of  the  regulation  of  currency  which  took  place  from 
1810  to  18.57  in  England,  or  if  he  had  ever  read  the  Report  of  the  Parliamentary 
Commission  of  1857  he  would  never  have  connected  his  name  with  a  scheme 
that  can  be  compared  with  no  other  ever  proposed,  except  that  once  under- 
taken by  John  Law. 

Any  proBOsition  that  turns  over  the  regulation  of  currency  to  institutions 
organized  for  private  gain  is  at  bottom  wrong.  Unless  it  is  to  their  interest 
to  furnish  the  business  world  with  money  they  wiU  not  do  it,  and  the  busi- 
ness world  must  suffer  the  consequences.  There  is  the  fatal  defect  in  this 
proposition,  and  which  in  my  judgment  is  enough  to  condemn  it  utterly. 

Mr.  Chairman,  I  will  not  take  up  the  time  of  the  committee  any  longer,  but 
will  simply  say  I  am  very  much  obliged  to  you,  and  that  I  would  like  to  add 
to  my  statement  a  few  quotations  which  I  have  not  had  time  to  read. 

Mr.  Cobb  of  Alabama.  Can  you  give  us  something  as  a  substitute?  You 
have  been  tearing  down,  but  you  are  not  building  up  anything. 

Mr.  Wahner.  I  would  do  this.  I  would  do  exactly  as  is  recommended  in  the 
report  of  18.57.  There  is  but  one  way  by  which  the  currency  can  be  automat-, 
ically  regulated.  The  world  has  never  found  but  one,  and  that  is  through 
the  production  of  the  metals.  Subject  the  supply  of  money  to  the  same  laws 
that  govern  the  supply  of  everything  else.  Then  if  the  production  of  metal- 
lic money  should  be  undulyjincreased,  it  would,  of  course,  become  depreciated, 
as  would  be  made  manifest  by  rise  in  prices;  but  the  point  would  very  soon  be 
reached  where  it  would  be  easier  to  obtain  a  doUar,  or  where  a  dollar  could 
be  obtained  with  less  laV>or  and  energy  by  producing  something  else  to  ex- 
change for  it  than  digging  it  from  the  ground;  then  the  production  of  the 
metals  would  in  that  way  be  checked.  I  say  that  is  the  only  automatic  way 
the  world  has  ever  devised  or  ever  known  for  regulating  money. 

In  addition  to  that,  all  money  that  supplements  the  metals  should  be  rigidly 
limited  to  some  proportion  between  population  and  business,  the  one  pur- 
pose being  to  maintain  stability— the  greatest  possible  stability.  Again, 
another  objection  to  the  kind  of  currency  proposed  in  this  bill  is  that  it  is 
not  a  legal  tender.  All  money  ought  to  be  a  legal  tender.  If  it  pretends  to 
be  money,  it  should  be  money  when  you  pay  it  out  as  well  as  when  it  is  paid 
to  you.    Nothing  should  be  allowed  to  circulate  as  money  that  is  not  money. 

I  wish  to  acknowledge  the  clearne.ss  and  great  value  found  in 
1770 


93 

the  statement  of  General  Warner  as  against  banks  of  issue,  but  I 
desire  to  say  that  I  do  not  agree  with  him  that  the  automatic 
theory  of  regulation  of  volume  founded  on  the  mining  product  of 
gold  and  silver  is  either  a  safe  regulation  at  all  times  or  a  basis  of 
suflBcient  supply,  and  there  is  no  assurance  as  to  the  quantity  of 
the  future  supply  or  adequacy  for  the  i)resent  needs  of  civilization. 
In  the  last  sentences  I  have  quoted  from  him  he  himself  practi- 
cally gives  up  the  automatic  theory  of  metallic  limitation  when 
he  says  that — 

all  money  that  supplements  the  metals  should  be  rigidly  limited  to  some 
proportion  between  population  and  business,  the  one  purpose  being  to  main- 
tain stability. 

This  is  correct  and  defensible  as  a  basis  of  limitation. 

THE  "scare  word"  OF  "FIAT  MONEY." 

From  what  source  have  banks  ever,  in  this  country,  derived  the 
privilege  of  issuing  notes  to  circulate  as  currency? 

Always  and  only  by  the  grant  or  law  of  the  colony,  State,  or 
nation  in  which  such  banks  exist. 

Will  anyone,  then,  state  on  this  floor  that  foolish  and  indefen- 
sible doctrine  that  a  government  can  grant  a  power  to  banking 
corporations  that  it  can  not  maintain  and  exercise  itself? 

To  state  the  question  plainly  is  to  expose  the  fallacy  of  our  op- 
ponents; for  Congress  cannot  authorize  any  corporation  or  agent 
to  do  what  it  can  not  properly  and  constitutionally  do  for  itself. 

It  is  now  generally  seen  and  conceded,  and  no  member  on  this 
floor  will  deny,  that  money  can  not  be  coined  or  issued  or  other- 
wise sufficiently  certified  for  general  circulation  without  the  au- 
thority of  law,  and  the  right  and  force  of  money  as  such,  what- 
ever it  may  be,  are  legal  rights — not  natural. 

In  short,  money  is  the  creature  of  law. 

All  genuine  money,  whether  coin  or  paper,  is  in  this  sense  fiat 
money. 

The  term  "  fiat  money  "  is  another  scare  word  or  "  bogy  man  " 
with  which  the  cunning  bank  syndicate  would  scare  people  out 
of  the  right  to  exercise  their  own  authority  to  issue  legal-tender 
notes.  Bank  notes  can  not  and  do  not  circulate  in  this  country 
except  by  the  fiat  of  law.  They  are  the  joint  creation  or  fiat  of 
the  banks  and  the  Government. 

BANKS  VERSUS  GREENBACKS. 

In  my  speech  before  this  House  on  money,  banks,  and  debts  of 
the  world,  when  the  question  of  repeal  of  the  tax  on  State-bank 
circulation  was  before  Congress,  I  gave  a  strong  list  of  noted  au- 
thorities to  establish  the  quantitive  theory  of  money  value — I  need 
not  repeat  the  quotations  here— but  a  few  words  on  the  applica- 

1770 


94 

tion  of  this  elemental  and  universally  accepted  monetary  truth  to 
the  (luestion  now  before  us. 

All  the  propositions  coming  from  this  Committee  on  Banking 
and  Currency  and  all  advocated  by  those  anxious  to  befriend  the 
money  and  bank  power  in  this  country,  as  far  as  I  know,  and 
especially  the  Carlisle  plan,  and  the  Baltimore  plan,  provide  for 
banks  to  have  control  over  the  issuance  of  notes  to  circulate  as 
money  and  thus  to  control  the  volume  of  money  in  circulation. 

To  give  this  power  to  the  banks  is  to  turn  over  to  them  the  power 
over  prices  and  the  prosperity  of  the  people. 

Why  should  Congress  abdicate  its  rights  and  turn  away  from  its 
responsibilities  to  protect  the  people  from  the  ruinous  aggressions 
of  the  money  power? 

Has  Shylock  in  these  modern  days  become  a  saint,  that  he  should 
receive  greater  power  and  service  than  ever  before? 

Have  gentlemen  on  this  floor  lost  view  of  the  great  injustice  and 
irreparable  damage  they  do  to  the  people  who  sent  them  here 
when  they  propose  to  turn  over  to  the  banks  the  control  of  all 
prices,  profits,  and  through  these  ultimately  all  property  and  wealth 
of  our  unsuspecting  population? 

Surely  no  Congressman  can  be  ignorant  at  this  stage  of  the  dis- 
cussion that  all  of  these  propositions  look  to  the  denial  to  the  G-ov- 
emment  of  the  right  to  provide  and  maintain  in  circulation  an 
adequate  supply  of  money  "and  regulate  the  value  thereof." 
Shall  we  sun-ender  the  constitutional  duty  and  power  of  Congress 
to  banking  corporations  by  vote  of  the  Democracy? 

In  the  corrupted  currents  of  this  world 
Offense's  gilded  hand  may  shove  by  justice; 
And  oft  'tis  seen  the  wicked  prize  itself 
Buys  out  the  law. 

But  Congress  must  see  to  it  that  Shakespeare's  cutting  analysis 
of  the  corruptions  of  the  coiuts  have  no  fitting  application  in  an 
American  Congress. 

I  can  not  imagine  a  more  dangerous  surrender  of  power  than 
this  would  be  that  could  ever  come  in  times  of  peace  to  the  Con- 
gress of  the  United  States — 

When  all  the  blandishments  of  life  are  gone, 
The  coward  sneaks  to  death,  the  brave  Uve  on. 

Mr.  Chairman,  I  could  never  believe  that  the  freely  chosen  rep- 
resentatives of  70,000,000  Americans  could  be  induced  to  so  far 
betray  their  people,  if  I  had  not  on  a  former  occasion  witnessed  the 
confusion  and  cowardice  of  so  many  Representatives  who  yielded 
to  the  threats  and  clamors  and  blandisliments  of  the  gold  and 
bond  conspiracy  when  the  people  stood  for,  and  still  ask  for,  the 
restoration  of  silver  as  a  standard  money. 
1770 


95 

THE  PARITY  B'RAUD  AND  THE  GREENBACK. 

The  so-called  Sherman  silver-purchase  bill,  enacted  as  a  com- 
promise measure  in  the  act  of  July  14.  1890,  between  the  free- 
silver  and  gold-standard  opponents,  had  in  it  a  more  vicious,  far 
more  vicious,  measure  than  simply  the  purchase  of  four  and  one- 
half  million  ounces  of  silver  bullion  per  month. 

I  refer  to  that  clause  and  provision  of  the  law,  which  is  the 
cunning  statement  of  a  doctrine  or  the  catch  phrase  of  a  cam- 
paign speech  rather  than  the  enactment  of  a  law,  declaring  it  to 
be— 

The  established  policy  of  the  United  States  to  maintain  the  two  metals 
(gold  and  silver)  on  a  parity  with  each  other  upon  the  present  legal  ratio  (16 
to  1)  or  such  ratio  as  may  be  provided  by  law. 

The  free-silver  men  were  permitted  to  believe  that  this  admitted 
the  doctrine  that  silver  should  henceforth  have  equal  right  before 
the  governmental  authorities  with  gold  at  the  standard  ratio  of 
16  to  1  until  some  other  ratio  should  be  established  by  law;  but 
Senator  John  Sherman,  who  was  as  deep  in  this  scheme  to  sub- 
ordinate silver  to  the  gold  standard  in  1890,  and  is  still  in  1895,  as 
he  was  in  the  demonetization  scheme  of  1873,  seemed  to  have 
known  just  what  interpretation  the  Harrison  Administration 
would  put  upon  that  phrase,  and  so  keeping  "  the  two  metals  at  a 
parity  with  each  other  upon  the  present  legal  ratio  "  has  from 
that  time  to  this  been  construed  to  require  not  an  equality  or 
parity  between  them  on  the  16-to-l  ratio,  but  a  constant  and  de- 
termined subordination  of  one  of  the  metals — silver — to  the  other — 
gold — on  the  theory  that  all  other  money,  silver  as  well  as  paper, 
must  be  redeemable  on  demand  instantly  in  gold;  as  if  gold  alone 
was  the  only  money  of  ultimate  redemption. 

Surely  the  eminent  services  that  the  eminent  demonetizer  has 
rendered  the  European  gold  mongers  ought  to  entitle  his  portrait 
to  a  place  in  the  innermost  temples  of  the  gold  worshippers  of 
Europe. 

Surely  the  shylock,  chuckling  over  the  successful  game  and 
trick  of  gold  redemption  of  all  other  money  which  they  are  play- 
ing upon  the  leading  nations  of  the  commercial  world,  while  they 
play  the  elasticity  scheme  of  contracting  and  clutching  the  gold 
always  when  most  needed  by  the  debtor  world,  can  find  abundant 
reasons  for  lauding  the  financial  qualities  of  their  greatest  advo- 
cates in  America. 

Parity!  As  played  upon  our  people  it  is  worse  than  the  plague 
of  fiery  serpents  upon  ancient  Israel  in  the  wilderness.  And  the 
lifting  up  of  silver  before  the  people,  coined  without  limit,  into 
good,  bright,  and  honest  dollars  will  have  as  great  an  effect  in- 
stantaneously and  psychologically  to  cure  the  gold  plague  of  our 

1770 


96 

day  as  dul  the  lifting  up  of  the  brazen  serpent  to  cure  the  plague 
of  the  ancient  times. 

But  I  have  already  sufficiently  discussed  the  question  of  mis- 
construing the  word  parity. 

Does  anyone  believe,  after  a  careful  and  fair-minded  investiga- 
tion of  that  "  parity"  clause,  tliat  the  two  metals — not  coins,  but 
metals  —gold  and  silver,  are  kept  at  a  parity  or  on  an  equality  on 
the  old  ratio  by  such  a  subordination  and  noncoinage  of  silver? 
Does  such  conduct  tend  to  keep  iip  the  price  or  value  of  silver? 
Does  it  not,  on  the  other  hand,  cast  silver  down  and  greatly  depre- 
ciate its  use  and  value  and  destroy  the  very  parity  that  they  pro- 
fess they  desire  to  uphold? 

And  to-day  listen  to  the  ominous  sounds  that  come  up  to  these 
halls  from  the  tamed  and  untamed  beasts  (the  bulls  and  bears)  of 
Wall  street  declaring  that  the  public  credit  is  endangered;  that 
the  gold  in  the  Treasury  is  about  to  be  carried  away  and  the  Gov- 
ernment to  be  left  without  gold  resources  with  which  to  keep  up 
the  redemption  of  United  States  notes  and  Treasury  notes— aye, 
that  even  European  money  speculators  are  afraid  we  will,  by  this 
drainage  of  gold,  be  driven  upon  a  silver  basis. 

Is  there  any  member  of  this  House  wlio  needs  to  be  told  that 
the  policy  and  decision  of  our  Treasury  officials  to  keep  silver  in 
subordination  to  gold  are  the  very  means  that  subject  our  Treasury 
to  a  constant  drainage  of  its  gold  reserves? 

Does  not  every  member  who  is  in  any  degree  competent  to  legis- 
late on  this  question  know  that  if  our  Treasury  officials  would  at 
once  exercise,  as  our  present  laws  allow,  the  option  that  European 
governmental  officials,  notably  in  France,  constantly  exercise  of 
paying  all  coin  obligations  in  silver  coin,  and  to  such  extent  as  best 
agrees  with  the  needs  and  supplies  of  the  Treasury,  that  this  would 
at  once  protect  the  gold  reserve  and  stop  all  runs  upon  our  Treas- 
ury to  obtain  gold? 

THE  PURPOSE  OF  THE  MONEY  POWER  REGARDING  TREASURY  GOLD. 

What,  then,  is  the  meaning  of  this  clamor  from  Wall  street 
and  the  bond  markets? 

It  means  that  they  wish  to  keep  up  the  very  condition  of  a  gold 
redemption  of  gi'eenbacks  or  some  other  form  of  money  easily 
accessible  to  them,  that  permits  the  drainage  of  gold,  at  their 
option,  from  the  Treasury.  But  at  the  same  time  by  trying  to 
alarm  the  country  generally  they  hope  to  secure  financial  legisla- 
tion that  secures  to  them  these  two  points: 

First.  To  get  United  States  bonds  issued  in  quantities  sufficient 
to  provide  them  investments  for  idle  monej',  money  that  declines 
to  take  any  part  in  the  risks  and  contingencies  of  oiir  industries 
and  property,  which  suffer  in  falling  prices  necessarily  while  the 

1770 


97 

country  is  being  driven  upon  the  narrow  and  contracted  gold 
standard.  And  these  bonds,  they  insist,  must  be  exempt  from 
taxation,  with  interest  semiannually  or  quarterly  and  payable  in 
gold. 

Second.  To  get  the  noninterest-bearing  legal-tender  notes  of  the 
Government,  so  highly  valuable  to  the  people,  retired,  canceled,  or 
locked  up  out  of  circtilation,  so  as  to  provide  more  room  for  them 
to  issue  and  loan  their  bank  notes  to  the  people,  and  so  also  to 
better  control  the  volume  of  money  in  circtilation  for  expansion 
or  contraction  at  their  option,  thus  making  it  elastic  for  them, 
and  as  their  interests  and  profits  may  require.  Never  yet  have 
they  proposed  a  currency  elastic  for  the  relief  of  any  other  clasa 
than  themselves. 

GREENBACKS  NOT  THE  CAUSE  OP  FINANCIAL,  STRINGENCY. 

I  challenge  any  member  on  this  floor  or  any  man  elsewhere  to 
find  any  instance  among  intelligent  business  men  and  laborers 
anywhere  in  the  country  where  they  have  ever  shown  lack  of  con- 
fidence in  the  monetary  qualities  and  debt-paying  power  of  the 
greenbacks. 

The  people  everywhere  know  they  are  as  reliable  as  the  founda- 
tions of  the  Government  itself.  They  are  the  best  money  ever 
coined  and  issued  to  the  people. 

Then  away  with  this  sham  cry  against  the  legal-tender  Govern- 
ment money. 

It  is  because  Government  money  is  the  best  money  that  the 
bank  syndicate  clamors  so  boisterously  for  its  retirement. 

They  want  the  best  and  full  legal-tender  money  out  of  the  way, 
so  that  from  sheer  necessity  the  people  will  have  to  use  their  in- 
ferior bobtail  nonlegal-tender  bank  issues. 

They  are  trying  to  play  the  old  fox  game  on  the  Government 
and  people  to  persuade  them  that  it  is  far  better  for  them  to  cut 
off  theii'  own  legal-tender  currency. 

REMEMBER  ^SOP'S  FABLE. 

By  his  own  avariciousness  an  old  fox  had  lost  his  tail  in  a  trap 
and  feared  he  would,  owing  to  this  shortage,  become  the  laughing 
stock  of  all  the  other  foxes  in  the  country.  So  he  resolved  to  try  to 
induce  them  to  have  their  tails  cut  off  also.  At  the  next  assembly 
of  the  foxes  he  made  a  speech  on  the  unprofitableness  of  tails  in 
general,  on  the  greater  advantages  of  promissory  substitutes  for 
tails,  and  the  inconvenience  of  foxes'  tails  in  particular,  since  they 
so  greatly  exhausted  the  resources  of  the  central  body  while  in 
circulation,  and  were  often  switched  around  so  as  to  disturb  the 
gold  reserves. 
1770 — 7 


98 

WHY   DESTROY  THE  GREENBACK  CURRENCYt 

Again  we  ask,  Why  this  sudden  and  impulsive  haste  to  get  rid 
of  United  States  legal-tender  notes?  Whence  arises  the  banker's 
animosity  to  them. 

Have  the  common  people,  manufacturers  or  merchants,  ever 
demanded  their  retirement?  Have  they  ever  failed  to  pay  debts 
or  to  circulate  at  par  for  debt-paying  purposes  and  exchange  for 
commodities? 

Has  anyone  ever  questioned  their  reliability  to  perform  all  the 
functions  of  money  given  to  them  by  law? 

But  we  need  not  go  far  to  find  the  reasons  why  the  associated 
banks  are  against  them. 

First.  They  are  better  money  than  any  the  banks  can  issue  in 
competition  ^vith  them. 

Second.  They  supply  near  $500,000,000  of  money  for  circulation 
($346,000,000  greenbacks  and  $153,000,000  of  Treasury  notes)  to 
the  people  without  interest  cost,  and  the  bankers  can  make  no 
profit  on  their  issue. 

Third.  Their  volume  is  beyond  the  option  and  power  of  the" 
banks  to  contract  and  expand  at  their  pleasure.  So  to  that  ex- 
tent illustrate  a  currency  which,  if  issued  in  proper  volume,  would 
destroy  the  power  of  the  banks  to  manipulate  prices,  profits,  and 
progress  of  industry. 

They  rest  on  the  law  and  credit  of  the  Government  without  the 
mediation  of  a  priesthood  of  Jewish  bankers.  They  are  pure  and 
perfect  money  to  the  extent  of  their  volume  and  legal-tender 
qualities.  They  are  the  noninterest-bearing  form  of  national 
debt,  and  if  issued  in  proper  volume  would  destroy  the  burdens 
of  bonded  debt. 

Mr.  St.  John,  before  the  Committee  on  Banking  and  Currency, 
well  said  "that  the  underlying  demand  of  the  gentlemen  who  have 
been  here  to  testify  in  behalf  of  any  of  these  bills  is  that  the  green- 
backs shall  be  retired.  That  is  basal  in  their  demands.  Profit  to 
the  issuing  banks  is  the  fii'st  requisite  of  any  creation  of  bank 
notes." 

It  may  not  be  improper  here  to  suggest  that  every  one  of  these 
r  easons  why  the  bank-issuing  fraternity  dislike  the  greenback 
currency  is  also  a  strong  reason  why  the  people  of  our  country 
should  hold  to  them  and  resist  the  selfish  demands  of  the .  banks 
regarding  them. 

Why  should  banks  decry  the  credit  of  the  little  noninterest-bear- 
ing bonds  in  shape  of  greenbacks,  which  the  people  need  even  in 
greater  volume  in  circulation,  resting,  as  they  do,  on  the  law  and 
decree  of  the  Government,  while  at  the  same  time  they  have  used 
larger  and  interest-bearing  bonds,  resting  on  the  same  law  and  fiat 
1770 


99 

of  the  Government,  as  an  all-sufficient  basis  of  security  for  their 
own  national-bank  issues? 

Why  do  they  still  decry  greenback  form  of  money,  while  they 
still  use  it  with  universal  approval  among  themselves  as  bank  re- 
serves and  perfect  redemption  of  their  own  note  issues? 

That  want  of  parity  does  not  interfere  with  international  trade, 
and  that  paper  legal-tender  money  will  stay  at  home  better  than 
metallic  money,  and  yet  be  no  interference  to  our  foreign  trade, 
while  maintaining  prices  at  home,  I  quote  again  Senator  Jones, 
and  through  him  Professor  Cairnes  and  John  Stuart  Mill: 

With  a  national  money— a  money  ■which  would  not  be  sent  out  of  the  coun- 
try—there would  be  no  great  rise  or  fall  of  prices,  and  no  great  changes  in 
the  volume  of  money.  All  the  money  would  remain  in  the  country,  for  the 
use  of  our  own  people,  and  all  differences  in  exchange  would  then  be  settled 
(as  they  should  be  settled)  by  commodities. 

It  would  then  be  as  profitable  to  meet  balances  of  trade  with  commodities 
as  with  money,  because  our  money  would  in  foreign  countries  be  mere  mer- 
chandise, which,  I  assert,  is  as  it  should  be.  The  money  supply  of  our  coun- 
try should  not  be  continually  oscillating  between  a  feast  and  a  famine,  alter- 
nately raising  hopes  and  dashing  them  to  the  ground. 

WANT  OF  PARITY  NO  OBSTACLE  TO  FOREIGN  TRADE. 

The  absence  of  a  parity  between  the  moneys  of  nations  does  not  affect  their 
foreign  trade,  as  some  would  have  us  believe.  I  challenge  any  gold-standard 
Senator  to  point  to  an  authority  of  repute  on  political  economy  who  any- 
where pretends  to  assert  that  any  nation  having  money  other  than  gold  is , 
or  can  be,  injuriously  affected  in  its  business  or  other  relations  by  any  vari- 
ance in  what  is  called  the  parity  of  moneys.  The  money  of  this  country, 
whether  gold,  silver,  or  paper,  will  always  command— will  always  purchase— 
npon  equitable  terms,  the  money  of  any  other  country  with  which  we  have 
commercial  relations,  whether  those  relations  be  directly  with  itself  or 
through  other  countries. 

One  of  the  most  eminent  of  economists.  Prof.  J.  E.  Cairnes,  of  the  Univer- 
sity College,  London,  though  an  eminent  advocate  of  the  gold  standard,  in 
his  Leading  Principles  of  Political  Economy,  says: 

"It  appears  to  me  that  the  influence  attributed  by  many  able  writers  in  the 
United  States  to  the  depreciation  of  the  paper  currency,  as  regards  its  effects 
on  the  foreign  trade  of  the  country,  is,  in  a  great  degree,  purely  imaginary. 
An  advance  in  the  scale  of  prices,  measured  in  gold,  in  a  country,  if  not 
shared  by  other  countries,  will  at  once  affect  its  foreign  trade,  griving  an  im- 
pulse to  importations,  and  checking  the  exportations  of  all  commodities  other 
than  gold. 

"A  similar  effect  is  very  generally  attributed  by  American  writers  to  the 
action  on  prices  of  the  greenback  inconvertible  currency.  But  it  may  be 
easily  shown  that  this  is  a  complete  illusion.  Foreigners  do  not  send  their 
products  to  the  United  States  to  take  greenbacks  in  exchange.  The  return 
which  they  look  for  is  either  gold  or  the  commodities  of  the  country;  and  if 
these  have  risen  in  price  in  proportion  as  the  paper  money  has  been  depre- 
ciated, how  should  the  advance  in  prices  constitute  an  inducement  for  them 
to  send  their  goods  thither?  The  nominal  gain  in  greenbacks  on  the  im- 
portation is  exactly  balanced  by  the  nominal  loss  when  those  greenbacks 
come  to  be  converted  into  gold  or  commodities.  The  gain  may,  in  particu- 
lar cases,  exceed  the  loss,  but,  if  it  does,  the  loss  will  also,  in  other  cases, 
1770 


100 

exceed  tho  gain.    On  the  whole,  and  on  an  average,  they  can  not  but  be  the 
equivalents  of  each  other." 

I  find  this  point  touched  npon  also  by  an  American  writer  whom  I  regard 
as  one  of  the  ablest  contributors  to  the  literature  of  political  economy  to  be 
found  in  this  or  any  other  country.  I  allude  to  Mr.  John  P.  Young,  the 
managing  editor  of  the  San  Francisco  Chronicle.  In  a  luminous  article  on 
bimet4illism,  in  the  issue  of  that  journal  for  August  3  last,  Mr.  Young  says: 

"But  the  suggestion  that  this  country  might  have  a  sole  silver  currency  is 
the  bogie  that  frightens  many  who  know  little  or  nothing  of  the  subject.  '  To 
have  a  sole  silver  currency '  in  their  eyes  means  unparalleled  disaster.  Such 
people  completely  ignore  the  fact  that  during  the  period  that  we  had  a  sole 
gold  currency  no  one  thought  that  the  country  was  threatened  with  ruin  be- 
cause the  dearer  silver  was  not  coined.  Such  as  gave  the  subject  a  thought 
at  all  and  had  any  real  knowledge  of  the  difficulty  desired  that  the  mistake  of 
undervaluing  silver  might  be  corrected,  but  they  would  have  judged  a  man 
a  fit  candidate  for  the  lunatic  asylum  had  he  asserted  that  disaster  would  cer- 
tainly follow  the  free  coinage  of  gold  because  it  was  cheaper  than  silver. 
*  *  *  If  a  nation  has  resources  and  a  people  capable  of  developing  them  it 
will  increase  its  wealth,  no  matter  what  sort  of  money  it  employs  to  circulate 
values,  provided  the  standard  of  values  is  not  tampered  with. 

"Between  1860  and  18S0  the  precious  metals,  silver  and  gold,  were  not  used 
to  circulate  values  in  the  United  States.  Our  only  currency  was  the  green- 
back—except in  California.  There  was  no  demand  for  gold  except  that  ar- 
tificially created  by  promising  to  pay  the  interest  on  bonds  in  money  of  that 
metal,  yet  during  the  period  in  question,  in  spite  of  a  devastating  war,  dur- 
ing which  production  was  interrupted  and  vast  quantities  of  property  de- 
stroyed, the  wealth  of  the  United  States  increased  from  $16,160,000,000  to 
$4;3,t>t"3,(X)0,(XK),  or  nearly  threefold  in  twenty  years.  If  the  theory  of  those 
who  make  a  fetich  of  gold  were  sound  this  could  never  have  happaned.  Nor 
while  we  were  increasing  our  wealth  at  home  did  our  foreign  trade  suffer. 
That  went  on  precisely  as  described  by  John  Stuart  Mill  in  his  chapter  '  On 
the  Foreign  Exchanges.'    After  supplying  an  illustration,  Mill  remarked: 

" '  It  thus  appears  that  a  depreciation  of  the  currency  does  not  affect  the 
foreign  trade  of  the  country.  This  is  carried  on  precisely  as  if  the  currency 
maintained  its  value.  *  *  *  if  the  currency  is  depreciated  10, 15,  or  30  per 
cent,  then  in  whatever  way  the  real  exchange  arising  from  the  variation  of 
international  debts  and  credits  may  differ  the  quoted  exchange  will  always 
vary  10, 1.5,  or  30  per  cent  from  it.  However  high  this  nominal  premium  may 
be,  it  has  no  tendency  to  send  gold  out  of  the  country  for  the  purpo.se  of 
drawing  a  bill  against  it  and  profiting  by  the  premium,  because  the  gold  so 
sent  must  be  procured,  not  from  the  banks  at  par,  as  in  the  case  of  a  con- 
vertible currency,  but  in  the  market  at  an  advance  of  price  equal  to  the  pre- 
mium.' " 

A  currency  issued  by  the  Government,  in  adequate  volume  and 
made  full  legal  tender,  circulating  among  a  people,  is  the  best  pos- 
sible form  in  which  a  people  can  fund  its  debt,  for  these  three 
principal  reasons: 

First.  It  is  an  absolutely  inexpensive  form  in  vphich  the  people 
of  a  nation  can  carry  their  nation's  indebtedness. 

Second.  It  provides  a  more  convenient  form  of  currency  than 
coin  and  independent  of  the  international  scramble  for  accumu- 
lations of  precious  metals. 

1770 


101 

Third.  It  provides  a  perfect  safeguard,  when  issued  in  adequate 
volume,  against  contraction  and  expansion  of  volume  in  the  inter- 
est of  money  dealers  and  protects  prices  of  all  other  property  and 
preserves  the  equities  of  time  contracts. 

WHY  THEN  COIN  METALS  INTO  MONEY? 

Then  would  you  have  the  precious  metals  coined  at  all?  asks  an 
opponent.  Yes;  not  that  a  Government  paper  currency  can  not, 
when  wisely  provided  and  its  volume  wisely  regulated,  prove  the 
best  currency  independent  of  coins  that  a  nation  may  have  when 
competent  to  reach  the  highest  ideals  in  practical  realization,  but 
because  the  traditional  or  race  thought  of  our  people  demands  an 
adherence  to  the  coinage  of  metals,  I  would  have  the  Government 
freely  coin  into  dollars  for  all  who  desire  it  all  the  bullion  that 
they  choose  to  bring  to  the  mints. 

And  again,  as  long  as  the  banking  forces  can  keep  up  the  con- 
viction among  the  people  that  money  made  of  paper  mtist  rest  on 
the  basis  of  instant  and  compulsory  redemption  at  the  demand  of 
the  holder  in  coin,  instead  of  resting  on  the  decree  of  law  and  re- 
ceivability  of  the  issuing  government,  which  principles  keep  up 
the  monetary  value  of  coins  themselves,  so  long  must  we  have  the 
broadest  possible  basis  of  coin  to  furnish  a  sufficient  and  available 
supply  of  coin  to  support  said  redemption. 

This  requires  a  bimetallic  basis,  for  all  competent  authorities  are 
settling  down  to  the  conviction  that  gold  alone  can  not  furnish  an 
adequate  supply  of  coin  for  a  sure  maintenance  of  coin  redemption. 
But,  Mr.  Chairman,  why  give  away  the  interests  of  the  public,  the 
interests  of  all  classes — the  laboring,  developing,  and  progressive 
classes — the  truly  American  interests  in  a  laboring  and  debtor 
nation,  on  this  banking  and  currency  question? 

Why  divert  the  bankers  by  temptations  so  strong  to  depart  from 
the  true,  safe,  and  legitimate  business  of  handling  loans,  discounts, 
deposits,  and  exchange  which  at  all  times  and  in  every  country  is 
understood  to  be  the  proper  sphere  of  true  banking,  and  induce 
them  to  go  into  the  business  of  issuing  currency  notes  to  supply 
the  money  that  the  Government  itself  should  supi)ly  for  the  cure 
of  the  money  famine  now  existing? 

A  THREE-CARD-MONTE  GAME. 

Why  by  law  authorize  bankers,  in  a  sort  of  three-card-monte 
game  with  the  public,  to  take  up  $100  for  every  $30  (30  per  cent) 
that  they  put  down,  and  to  have  the  free  use  of  the  $100  taken  up 
for  an  indefinite  length  of  time — to  such  time  as  they  choose  to 
lay  it  down  again  and  take  up  the  $30? 

Why  allow  this  extraordinary  privilege  to  the  present  bankers, 
with  their  thousand-million-dollars  capital,  and  aU  other  bankers 
1770 


102 

who  choose  to  bring  other  millions  of  capital  into  the  bankers'  side 
of  tlie  game?  Have  such  privileges  been  offered  to  any  other  class 
of  our  citizens? 

Coupling  these  privileges  with  the  provisions  looking  to  the  re- 
tirement and  destruction  of  the  Government  legal-tender  notes  so 
that  the  money  issuers  will  have  complete  control  of  the  circulat- 
ing medium  of  the  people,  is  there  anything  in  sight  left  for  the 
industrial  interests  of  the  country? 

Is  there  anything  to  keep  the  money  dealers  from  manipulating 
prices  in  their  own  interests  and  taking  ultimate  possession  of  as 
much  property  as  they  may  desire? 

Since  they  will  have  complete  control  of  volume,  who  can  pre- 
vent their  control  of  price,  for  the  most  fundamental  truth  in 
monetary  science  is  that  the  volume  in  circulation  will  and  does 
control  the  price  of  all  other  forms  of  property? 

Remember,  too,  that  prices  control  profits  and  profits  control 
the  emplojanent  of  labor  and  the  prosperity  and  welfare  of  the 
people. 

OUR  ATTACK  IS  ON   BAD  MEASURES,  NOT  MEN. 

Let  no  man  on  this  floor  jump  too  hastily  to  a  false  conclusion 
or  assertion  concerning  my  views  or  relations  to  the  business  of 
banking,  nor  let  any  man  assert  that  I  have  any  animosity  toward 
bankers.  I  have  no  such  views  or  feelings.  I  do  not  so  much 
condemn  the  bankers  who  are  urging  legislation  in  their  special 
interests  as  I  condemn  you  who,  on  this  floor  by  the  confidence  of 
your  people  and  the  sacred  duty  upon  you  of  protecting  their  in- 
terests, seek  by  vote  and  speech  to  turn  your  people  over  to  the 
control  of  the  money  power. 

NEEDLESS  FEAR  OF  FREE  COINAGE  OF  SILVER. 

There  is  a  sort  of  terrorism  on  this  silver  question  in  New  York 
City  and  a  strong  effort  to  suppress  facts  as  bearing  on  the  bene- 
fits of  free  coinage.  I  will  quote  what  Mr.  St.  John,  president  of 
the  New  York  Mercantile  National  Bank,  said  before  our  Cur- 
rency Committee: 

Public  oinnion  is  under  a  newspaper  terrorism  in  New  York.  Men  who 
agree  with  me  fully,  and  I  know  many  of  them  of  considerable  wealth,  prefer 
to  keep  silent  for  the  present.  Any  nobody  who  will  write  at  lengtti  a  lot  of 
nothingness  adverse  to  silver  money  will  be  accorded  certain  newspaper's 
space  and  be  dignified  into  great  authorities.  Rejoinder,  if  complete,  and 
the  more  complete  the  more  certainly  is  denied  even  a  limited  space.  Again, 
other  men  believe  that  until  a  change  of  administration  here  approaclies  it 
will  merely  cost  them  influence  to  speak  their  conclusions  favorable  to  silver 
money.  Then,  too,  certain  newspapers  shield  their  readers  against  intelli- 
gence and  cow  them  out  of  any  timid  convictions  they  might  indulge. 

As  an  instance.  Mr.  Horace  White's  Evening  Post  a  few  weeks  ago  quoted  at 
length  from  the  London  Economist  one  Rawlinson's  criticism  of  Manchester's 
complaint  of  England's  gold  monometallism  as  relating  Manchester  to  India. 
1770 

( 


103 

The  complete  rejoinder  two  weeks  later  in  the  Economist,  a  compilation  of 
facts  that  refuted  Rawlinson  totally,  has  never  even  been  mentioned  by  the 
Evening  Post. 

But  conditions  current  here  and  elsewhere  are  forcing  the  truth  upon  gen- 
eral attention,  and  a  rebellion  against  this  tyranny  and  concealment  of  facts 
will  manifest  itself  ere  long  in  New  York  as  elsewhere. 

I  have  no  doubt  that  a  very  great  number  of  persons  honestly 
fear  that  free  coinage  of  silver  at  this  time  would  have  disas- 
trous results — and  so  they  would  thus  sacrifice  the  sure  relief  and 
gi'eat  benefits  it  would  bring  to  us. 

They  fear  that  we  would  at  once  be  thrown  upon  what  they 
would  call  a  silver  basis,  or,  in  other  words,  that  gold  would  go 
to  a  premium  over  silver  and  our  other  ordinary  forms  of  cur- 
rency. 

Let  me  observe  to  quiet  needless  fears  on  these  points — 

First.  That  for  export  purposes  there  would  be  no  more  demand 
for  gold  than  now  exists,  so  we  would  lose  nothing  in  that  regard. 

Second.  That  there  would  be  no  inducement  for  hoarding  gold 
for  the  reason  that  its  monetary  use  in  coins  is  its  principal  use, 
and  it  could  pay  no  more  debts  legally  than  the  same  amount  of 
silver  dollars  could  pay. 

Third.  That  if  Europe  became  afraid  to  sell  us  goods  and  take 
their  pay — as  some  imagine — in  silver,  the  result  would  be  that 
they  would  have  to  pay  for  our  products— of  which  they  must  con- 
tinue to  consume  large  amounts — in  money  instead  of  goods,  and 
that  would  bring  gold  into  the  country  instead  of  taking  it  out. 

Fourth.  They  have  no  stock  of  silver,  outside  of  their  own  silver 
coins,  that  they  could  use  to  pay  us  or  to  "  dump  "  upon  us,  as 
some  express  it;  and  besides  this  condition  existing  their  own 
coinage  of  silver  is  on  a  basis  of  15^  to  1  of  gold,  so  they  would  lose 
one-half  ounce  of  silver  out  of  every  16  ounces  sent  us,  as  our  ratio 
is  16  to  1.     So  silver  will  not  come. 

Fifth.  There  would  as  a  first  impulse  probably  be  a  tendency  to 
send  their  holdings  of  United  States  bonds  in  Europe  back  to  this 
country.  The  result  of  that  would  be  that  interest  payments 
thereon  would  stay  in  this  country  instead  of  being  as  now  a  con- 
stant drain  upon  us  and  a  present  means  of  withdrawing  gold  from 
us  at  their  option.  These  returning  securities  would  require  a 
portion  of  our  gold  supply  unless  in  their  need  of  our  wheat,  cot- 
ton, and  other  staples  they  preferred  to  leave  the  gold  with  us  and 
take  our  staple  products  which  at  any  rate  they  must  have. 

Sixth.  The  mint  price  of  silver  lander  free  coinage  becomes  $1  .'29 
per  fine  ounce  instead  of  a  present  market  price  of  65  cents  })er 
ounce.  With  our  use  for  all  of  it  at  home  Europe  would  still  have 
to  get  supplies  of  silver  for  their  Asiatic  trade  and  would  have  to 
give  also  $1.29  per  ounce  for  it,  as  I  have  already  shown. 
1770 


104 

Seventh.  But  lesseuing  the  demand  on  gold  by  bringing  silver 
into  fuller  use  for  money  would  tend  to  cheapen  gold  throughout 
the  world  as  well  as  here.  So,  as  silver  went  up  to  mint  price,  gold 
would  tend  to  come  down  or  be  less  valuable  than  before. 

Eighth.  The  more  thoroughly  silver  under  free  coinage  would 
stay  at  home,  as  some  hold,  and  accumulate  in  our  circulation 
and  vaults  the  further  we  would  be  removed  from  panic  and  fail- 
ure on  account  of  coin  redemption  of  all  coin  obligations. 

The  history  of  gold  movements  under  the  adoption  of  the  Bland- 
Allison  silver  law  of  1878  will  verify  these  claims.  (See  testimony 
of  St.  John  on  this. ) 

DOES  SILVER  COINAGE  INCREASE  EXPORT  OF  GOLD? 

In  addition  to  e\'idence  already  quoted  let  us  add  that  from  the 
exceUent  tables  prepared  by  Maurice  L.  Muhleman,  cashier  of  the 
United  States  subtreasury  at  New  York,  we  find  the  following 
facts,  showing  that  the  increase  of  our  stock  and  coinage  of  silver, 
instead  of  driving  gold  out  of  the  country,  as  the  goldites  then 
prophesied  and  still  do.  the  effect  is  exactly  the  opposite. 

The  figures  are  given  by  the  author  in  round  numbers  the 
more  readily  to  indicate  the  general  fact. 

Our  entire  stock  of  gold  in  this  countrj'  at  the  end  of  fiscal 
year  1877  was  $145,000,000.  Restoring  silver  to  coinage  under 
the  Bland- Allison  act  of  February  28,  1878,  was  followed  by  ac- 
quisition and  coinage  of  $16,000,000  of  silver  the  first  year.  In- 
stead of  loss  in  the  stock  of  gold  there  was  an  actual  gain  of 
$68,000,000  in  gold. 

The  prophecy  of  the  goldites  was  wrong  and  that  of  the  friends 
of  silver  was  right. 

During  the  next  year  there  was  a  gain  in  silver  of  $25,000,000. 
Did  it  drive  out  gold? 

On  the  contrary,  there  was  again  of  $33,000,000  in  gold.  And 
going  on  increasing  our  stock  of  silver  the  following  year  $28,- 
000,000,  there  was  also  an  increase  of  $10(5,000,000  in  gold,  and 
while  our  stock  and  coinage  of  silver  kept  on  upward  there  was 
another  addition  to  our  stock  of  gold  of  $120,000,000  the  next  year. 

The  same  tendency  for  gold  and  silver  stock  to  accumulate  to- 
gether in  a  country  is  noticeable  in  the  total  general  results.  While 
our  stock  of  silver  has  increased  to  a  total  of  $538,000,000  at  end 
of  fiscal  year  in  1893,  our  stock  of  gold  also  was  $592,000,000. 

SILVER  LESSONS  FROM  OTHER  NATIONS. 

The  most  recent  available  statistics  showing  money  systems  and 

aggregate  stocks  of  the  various  countries  of  the  world,  on  page  130 

of  the  Coinage  Laws  and  Statistics,  prepared  by  the  present  Senate 

Finance  Committee,  show  the  following:  The  two  countries  having 

1770 


105 

the  greatest  stock  of  silver  in  the  world,  except  India,  are  France 
and  the  United  States,  and  these  two  countries  instead  of  losing 
their  gold  have  accumiilated  and  hold  the  greatest  stocks  of  gold 
also. 

Enlarging  the  use  and  coinage  of  silver  then  does  not  drive  out 
gold  but  seems  to  have  in  a  general  way  the  exact  opposite  effect. 
The  philosophy  of  this  is  that  whatever  conditions  of  finance  and 
trade  enables  a  country  to  best  utilize  its  productive  energies  and 
accumulate  either  of  the  precious  metals  enables  it  to  accumulate 
and  to  hold  both. 

Dismiss,  then,  your  fears,  Oh,  ye  timid,  that  by  unlimited  coin- 
age of  silver  you  will  drive  gold  from  us  or  throw  us  for  any 
length  of  time  upon  a  silver  basis. 

With  the  bitter  irony  that  students  of  monetary  science  in 
Europe  ought  to  appreciate  the  gold  standard  British  bankers 
themselves  at  the  time  of  the  Barings  failure  had  to  go  to  France 
for  help  and  for  gold — to  France,  where  not  only  a  very  large 
volume  of  silver  money  exists,  but  where  the  Bank  of  France  in- 
sists on  using  silver  as  a  money  of  redemption  at  her  own  option, 
and  not  the  option  of  others,  as  is  the  case  at  our  Treasur  J^ 

THE  ENTIRE  MASS  OF  MONEY  MEASURES  THE  ENTIRE  MASS  OF  WEALTH. 

Again  recalling  the  illustration  of  the  lever,  with  money  and 
the  banks  on  one  end  of  it  and  property  and  the  people  on  the 
other,  I  wish  to  spend  a  little  time  in  speaking  to  you  of  the 
entire  mass  of  money  on  one  side  and  its  divisions,  and  of  the 
entire  mass  of  wealth  or  property  and  its  divisions  and  price  or 
valuation  and  measurement  of  its  divisions  on  the  other  side. 

When  we  speak  of  the  value  of  money  what  is  generally  under- 
stood is  that  we  are  referring  to  each  unit  or  dollar  measured  in 
prices  of  other  things. 

By  proper  subtraction  of  all  money  now  held  in  bank  reserves, 
in  secret  niding,  in  hoarding  to  await  revival,  and  in  the  conges- 
tion of  money  in  the  deposit  banks  of  reserve  cities,  we  shall  find 
there  is  not  over  $500,000,000  in  actual  circulation  against  $50, 000,- 
000.000  of  wealth. 

Before  this  late  "bankers'  panic" — the  panic  of  1893 — the  valiv 
ation  of  the  wealth  was  at  least  $60,000,000,000,  but  we  must  allow 
at  least  15  per  cent  for  shrinkage  in  the  wealth. 

So  there  is  to-day  one  dollar  in  money,  approximately,  for  every 
hundred  dollars  of  wealth  or  property,  or  about  1  per  cent,  and 
if  we  do  not  make  the  subtractions  for  congestion  of  currency  in 
banks  it  may  amount  to  2i  per  cent. 

Senator  Plumb,  in  1890,  in  Jiine,  said: 

If  I  was  deciding  this  case  [the  actual  number  of  dollars  in  circulation] 
1770 


106 

upon  what  I  consider  the  V>est  evidence.  I  would  be  bound  to  say  that  I  believ« 
the  money  in  actual  circulation  did  not  much,  if  at  all,  exceed  $500,000,000. 

Now,  Mr.  Cliairman,  having  such  high  justification  of  the 
reasonableness  of  my  estimate  of  the  number  of  dollars  in  actual 
circulation  as  the  case  stands  under  present  conditions  of  money 
stringency  and  record-breaking  decline  of  prices  resulting  there- 
from, let  me  go  on  with  my  elucidation  of  relations  between  the 
tinits  of  money  and  their  entire  mass  on  one  side  and  the  entire 
mass  of  property  on  the  other  side,  subject  to  exchange  for  money. 

Our  entire  mass  of  actually  circulating  money  is  then  divided 
we  will  say  into  five  hundred  million  parts,  which  we  call  dollars 
or  units  of  valuation  in  oiir  monetary  system. 

Let  us  compare  these  units  now  with  some  specific  part  of  ex- 
changeable  wealth  to  see  where  prices  are  ranging. 

Our  illustration  will  be  true  whether  you  regard  five  hundred 
million  or  fifteen  hundred  million  parts  or  dollars  as  the  present 
circulation. 

Each  of  the  parts  now  equals  in  value  two  bushels  of  wheat, 
which  gives  us  50-cent  wheat,  or  two  bushels  to  the  dollar. 

If,  now,  we  would  divide  the  entire  mass  of  money  in  circula- 
tion into  double  as  many  parts  or  dollars,  making  money  twice  as 
abundant,  then  it  would  take  two  parts  or  dollars  to  equal  the 
two  bushels  of  wheat. 

This  must  be  clear  to  all  and  would  give  us  dollar  wheat  in- 
stead of  50-cent  wheat. 

As  we  divide  the  mass  of  money  into  greater  numbers  of  parts 
we  multiply  or  increase  the  price  in  same  proportion. 

Now,  suppose  we  divide  the  mass  into  fewer  parts  than  the 
present  status,  then  each  part  will  be  larger  or  of  greater  value  or 
purchasing  power.  If  we  divide  the  entire  mass  into  only  one- 
half  as  many  as  now  exist,  then  we  have  exactly  doubled  the 
value  of  each  part  or  monetary  unit — and  so  our  one  dollar  for 
two  bushels  changes  its  ratio  into  one  dollar  for  four  bushels, 
which  gives  us  35-cent  wheat. 

And  if  the  gold  standard  contractionists  shall  continue  their  proc- 
esses to  produce  by  contraction  what  they  call  the  "highest  and 
best  dollars"  we  will  yet  see  2o-cent  wheat  in  Chicago,  and  cotton 
8  cents,  and  all  other  things  reduced  in  proportion. 

It  is  idle  to  talk  about  reaching  bottom  in  prices  or  to  claim  that 
the  industrial  world  can  not  see  prices  go  lower. 

There  is  no  bottom,  except  that  which  stands  on  the  number  of 
dollars  in  circulation,  and  if  Congress  perpetuates  the  present 
banking  sy.stem,  witli  unlimited  bond  issues,  or  enacts  this  pres- 
ent so-called  Carlisle  bill,  which,  to  an  equal,  if  not  greater  de- 
gree, puts  the  power  tc^  control  the  aggi'egate  circulation  into  the 

1770 


107 

hands  of  banking  corporations,  then  as  certainly  as  the  law  of 
gravitation  regulates  the  general  movements  in  planetary  sys- 
tems so  sure  will  these  corporations  control  and  regulate  price  to 
add  to  their  own  gams  and  those  of  their  favorites  at  the  loss 
and  expense  of  the  laboring  and  producing  world. 

They  will,  as  far  as  they  are  able  to  act  in  concert,  contract  cir- 
culation and  price  when  they  desire  a  period  of  liquidation  and  set- 
tlement, and  then  expand  the  circulation  and  boom  prices  when  they 
wish  to  sell  back  to  the  people  the  harvestings  of  their  periods  of 
panic  and  liquidation. 

This  is  the  elasticity  they  want,  the  india-rubber  game  they  have 
been  playing  for  twenty-five  years,  and  the  game  tliey  stUl  will 
play  if  they  can  get  bonds  enough  on  the  one  hand  or  the  Carlisle 
bill  on  the  other. 

It  is  like  the  great  wickedness  of  the  Israelites  of  old  in  changing 
standards  between  the  periods  of  buying  and  selling,  against  which 
iniquity  and  robbery  the  prophet  Amos  hurled  his  vehement  utter- 
ances: 

Hear  this,  O  ye  that  swallow  up  the  needy,  even  to  make  the  poor  of  the  land 
to  fail. 

Saying,  When  will  the  new  moon  be  gone,  that  we  may  seU  corn?  and  the 
Sabbath,  that  we  may  set  forth  wheat,  making  the  ephah  small,  and  the 
shekel  great,  and  falsifying  the  balances  by  deceit? — Amos,  viii  4,5. 

The  modern  method  is  much  more  subtle  and  unobserved  by 
many  of  the  producers  of  the  land,  but  far  more  effectual  and  far 
reaching  than  any  scheme  the  Jews  had  ever  invented  until  within 
the  last  two  centuries.  Their  game  now  is  not  to  change  weights 
and  measures  between  the  periods  of  buying  and  selling,  but  to 
change  prices,  so  as  to  take  in  wealth  at  depressed  and  panic  prices 
and  tlien  reverse  the  processes,  expanding  so  as  to  sell  back  again  at 
higli  prices  on  gold  contracts  until  the  next  period  of  contraction, 
panic,  and  liquidation. 

Yes—'  'elasticity  of  the  currency"  is  a  catchy  phrase  for  the  game . 

Loading  the  dice  and  packing  the  cards  are  such  dishonorable 
methods  that  few  gambling  houses  can  maintain  their  reputation 
by  such  tricks;  but  they  are  comparatively  harmless  beside  the 
game  the  money  power  seeks  continuously  to  play,  by  their  tricks 
of  gold  redemption  and  bank  issuance  in  which  all  the  people  are 
involved. 

When  the  bankers  of  Wall  street  started  in  the  spring  of  1893 
to  give  us  an  object  lesson,  aided  by  those  who  sit  in  high  posi- 
tion, and  aided  further  by  the  fine  hand  of  the  Europsan  gold 
conspirators  in  the  sudden  demonetization  of  silver  for  the  sub- 
jugated people  of  India,  did  they  not  successfully  teach  us  the 
lesson  of  contraction? 
1770 


108 

They  iu)t  only  smldenly  contracted  bank  circulation  thirty  to 
forty  milhous  of  dollars  in  a  few  months,  but  they  pushed  all  the 
associated  and  corresponding  banks  into  shorteniuir  up  their  loans 
and  credits  at  the  same  time.  They  followed  this  after  October, 
189;^.  with  such  an  expansion  as  suited  their  purposes.  This  is  the 
elasticity  game  well  exhibited.  Then  since  that  they  have  secured 
an  issue  of  $10IJ. 000, 0;)0  in  bonds  under  the  claim  of  maintaining 
the  suppos.^d  gold  redemption  basis,  paying  for  the  bonds  largely 
out  of  gold  thit  they  lojt  from  the  Treasury  under  the  pretense 
of  helping  the  Governmeut  maintain  parity  and  its  gold  reserve. 
Although  these  bonds  are  of  very  doubtful  if  not  absolutely  illegal 
issue,  yet  doubtless  they  intend  using  them  largely  as  basis  on 
which  to  expand  the  currency. 

Is  not  this  object  lesson  enough  to  show  what  elasticity  for  the 
banks  means  to  the  people? 

Is  it  not  sufficiently  evident,  Mr.  Chairman,  that  the  banks 
ought  to  be  deprived  forever  from  having  anything  to  do  with  the 
issue  of  currency,  and,  as  Jefferson  taught,  that  bank  issues  should 
be  suppressed,  and  the  circulation  be  restored  to  the  Government, 
where  it  i)roperly  belongs  ? 

If  we  can  not  learn  from  these  lessons,  and  from  the  threats  of 
their  insolent  power,  often  given,  and,  on  the  other  hand,  from  the 
teachings  of  the  fathers  of  true  Democracy,  from  the  teachings 
of  eminent  authorities  and  the  testimonies  of  able  financiers  in 
every  country,  and  from  the  lessons  of  history  and  the  ruin  of  our 
industries  and  our  x>eople,  then  when  can  we  learn  the  curse  of 
submission  to  the  bank  and  bond  and  gold  conspiracy? 

Our  enemies  are  united  in  both  Europe  and  America  and 
throughout  the  world. 

The  in^^sible  empire  of  wealth  is  not  bounded  by  the  shores 
of  wide  salt  seas  nor  by  the  snow-capped  mountain  ranges  that 
have  through  long  centuries  bounded  and  limited  the  usual  ag- 
gressions of  national  power. 

Its  conquests  are  the  wealth  of  the  all-trading  nations;  its  vic- 
tims, the  helpless  people  of  all  climes;  its  dem?.nds,  the  patient 
toU  and  slavery  of  all  races;  its  instrument,  gold  redemption  bank 
money. 

If  there  is  one  thing  above  others  that  it  has  hated  and  feared, 
it  is  that  America  and  her  legal-tender  greenbacks  might  live  and 
teach  mankind  to  provide  their  own  money  independent  of  the 
ba  nks. 

Wlien  we  see  the  insolence  vsdth  which  the  gold  conspirators 
seek  to  plant  themselves  in  power,  may  we  not  say  of  them  as 
Cicero  against  Cataline  said: 

Hove  long.  O  Cataline,  wilt  thou  abuse  our  patience?  Art  thou  not  daunted 
17T0 


109 

by  the  nightly  watch  posted  to  secure  the  Palatium?  *  *  *  Thy  wretched 
conspiracy  is  laid  bare  to  every  man's  knowledge  herein  the  Senate.  *  *  * 
We  are  well  aware  of  thy  proceedings  last  night.  *  *  *  Alas  the  times  1 
Alas  the  public  morals!  The  senate  understands  all  this.  The  consuls  see  it. 
Yet  the  traitor  lives!  Lives?  Ay,  truly,  and  confronts  us  here  in  council; 
takes  part  in  our  deliberations;  and  with  his  measuring  eye  marks  out  each 
man  of  us  for  slaughter.    *    *    * 

And  may  we  not  say  as  he  again  said  against  the  rich  and  strong 
tyrant  praetor  Verres,  in  which  Cicero  so  strongly  pleaded  for  ac- 
tion on  the  higher  motives: 

0  liberty !    O  sound  once  more,  once  more  delightful  to  every  Roman  ear  I 

Once  sacred — now  trampled  onl 

Is  it  come  to  this?  *  *  *  Shall  nothing  restrain  the  merciless  monster 
who,  in  the  confidence  of  his  riches,  strikes  at  the  very  root  of  liberty,  and 
sets  mankind  at  defiance?  And  shall  this  man  escape?  Fathers,  it  must  not 
be!  It  must  not  be  unless  you  would  certainly  undermine  the  very  founda- 
tion of  social  safety,  strangle  justice,  and  call  down  anarchy,  massacre,  and 
ruin  on  the  commonwealth. 

SHOULD  WE  INCREASE  THE  VOLUME  IN  CIRCULATION? 

1  have  already  referred  to  the  volume  of  circulation. 

It  is  not  the  absolute  volume  of  currency  in  circulation  that  en- 
dangers prosperity  so  much  as  the  variations  occurring  in  the  vol- 
ume after  business  is  established. 

It  is  by  the  change  of  the  money  end  of  the  lever  up  or  down 
that  carried  the  property  and  people's  side  of  the  lever  up  or  down 
in  opposite  directions.  The  general  range  of  prices  when  money 
was  abundant  at  the  close  of  the  civil  war  marks  a  proper  level. 
Shrinkage  from  those  prices  was  what  destroyed  the  equity  of 
time  payments. 

The  changing  of  circulation  disturbed  price  and  valuation  of  all 
these  things,  and  so  broke  the  demands  of  equity. 

It  is  impossible  to  maintain  prices  and  secure  an  equitable  share 
of  profits  to  producers  on  a  shrinking  voltime  of  currency. 

In  speaking  on  this  subject,  and  having  reference  to  the  con- 
traction and  expansion  of  the  currency  indtilged  in  by  the  banks 
of  issue  during  his  day,  Mr.  "Webster  said: 

It  is  hardly  necessary  to  dwell  upon  the  evUs  of  a  suddenly  diminished  cir- 
culation. It  arrests  business:  puts  an  end  to  it,  and  overwhelms  all  debtors 
on  the  depression  and  downfall  of  prices;  and  even  if  we  reduce  circulation 
not  suddenly,  but  still  reduce  it  further  than  is  necessary  to  keep  within  ,iust 
and  reasonable  limits,  it  would  produce  manv  mischiefs:  it  would  augment 
the  necessity  of  foreign  loans;  would  contract  business,  discourage  enter- 
prises, slaciien  the  activity  of  capital,  and  restrain  the  commercial  spirit  of 
the  country. 

To  keep  up  the  increase  of  currency  with  the  increase  and  de- 
1770 


110 

velopment  of  business  and  population  is  no  relief,  for  that  simply 
prevents  an  actual  relative  shrinkage. 

I  know  of  no  method  to  exactly  measure  the  volume  of  business 
and  excliange  in  our  country,  buying,  selling,  and  paying  debts. 
We  can  approximate  to  it  by  taking  the  population  of  a  country 
as  a  basis  and  stating  circulation  as  being  so  much  per  capita. 

This,  all  points  considered,  is  perhaps  the  best  tSrm  to  use. 

But  when  it  comes  to  determining  what  number  of  dollars  per 
capita  should  be  in  circulation  I  do  say  that  we  have  an  infallible 
index  of  a  departure  from  the  proper  circulating  volume  when  we 
see  a  general  decline  or  fall  in  prices. 

When  that  is  detected  the  true  method  to  be  used  by  Congress, 
if  it  seeks  the  welfare  of  the  whole  people  and  the  maintenance  of 
equity  on  all  time  contracts,  is  to  begin  at  once  to  increase  the 
volume  of  currency  to  cure  the  evils  of  falling  prices. 

Expand  the  currency  until  the  general  average  of  prices  is  re- 
stored and  all  the  productive  energies  of  the  nation  are  utilized  to  the 
best  advantage.  When  this  point  is  reached  the  circulation  is 
right  and  the  volume  is  proper. 

THOSE  WHO   PLEAD  FOR  EQUITY  MUST  DO  EQUITY. 

The  creditor  portion  of  the  community  have  no  right  to  complain 
of  expansion,  for  they  have  had  the  benefit  of  twenty-five  years  of 
contraction.  "He  who  demands  justice  must  administer  jus- 
tice," is  a  good  old  German  maxim. 

Starting  to  correct  wrongs  as  we  find  them,  however,  and  not 
undertaking  to  reverse  the  contraction  methods  of  the  money 
power  and  creditor  world  any  further  than  necessarj'  to  provide 
for  the  present  and  future  protection  of  the  people  from  the  finan- 
cial wrongs  they  have  suffered,  we  should  not  expand  the  circu- 
lating currency  volume  only  to  that  point  where  prices  are  restored , 
profits  accrue  to  legitimate  industrial  effort,  and  labor  is  fully  em- 
ployed at  remunerative  wages. 

These  good,  price-restoring  results  of  expansioi  of  the  currency 
may  be  reached  at  $40  per  capita.  If  so,  stop  at  that  and  keep  the 
volume  substantially  uniform  in  relation  to  business  at  that  ratio. 
If  the  full  and  profitable  employment  of  our  productive  forces  are 
not  secured  at  $40  per  capita,  as  I  have  said,  issue  more,  for  we 
should  never  stop  short  of  issuing  and  coining  together  the  requi- 
site amount  to  secure  the  results  of  restored  prices  and  activity. 

The  best  and  most  productive  and  prosperous  times  we  have  ever 
had  in  this  country  was  at  the  close  of  the  war  or  soon  thereafter, 
when  the  circulation  was  slightly  above  $50  per  capita,  and  no 
men  nor  class  of  men  were  suffering  any  injustice  by  reason  of  the 
good  times  secured. 
1770 


Ill 

OUBBENCY  CONTEACTION  FOLLOWED  THE  CLOSE  OF  THE  CIVIL  WAB. 

I  will  submit  the  table  published  in  the  Chicago  Inter  Ocean, 
which  circulates  largely  in  the  West,  and  is  high  authority  among 
Republicans  there: 


The  volume  of  currency  was  for— 

1866 $50.76 

1867 36.68 

1868 22.05 

1869 19.80 

1870 19.30 

1871 - 18.47 


The  volume  of  currency  was  for — 

1872 $17.00 

1873 17.48 

1874 17.89 

1875 17.a5 

1876.; 15.89 

1877 14.40 


This  table  shows  gradual  contraction  down  to  the  year  1877. 

In  the  same  connection,  the  Inter  Ocean  makes  this  remark  in 
regard  to  the  circulation  of  the  7.30  notes,  of  which  at  one  time 
there  were  over  $800,000,000  out: 

The  7.30  three-year  notes,  whose  circulation  as  currency  is  most  scouted, 
were  outstanding  on  the  1st  of  September,  1865,  to  the  amount  of  |830,1J(JO,000, 
every  dollar  of  which  was  legal  tender  for  its  face  value  under  the  terms  of 
the  law  "  to  the  same  extent  as  United  States  notes." 

Gen.  John  A.  Logan  in  1874  (from  page  139,  Congressional 
Record  of  that  year) ,  in  a  speech  he  made  in  this  body,  said  that 
there  had  been  at  that  time  a  contraction  of  over  one  thousand 
miUion  dollars  ($1,018,167,784). 

He  once  was  high  and  honorable  authority  in  the  West. 

General  Grant  said  in  his  message  of  1873: 

In  view  of  the  great  actual  contraction  that  has  taken  place  in  the  cur- 
rency, and  the  comparative  contraction  continuously  going  on,  due  to  the 
increase  of  population,  increase  of  manufactories,  and  all  the  industries,  I 
do  not  believe  there  is  too  much  of  it  now  for  the  dullest  period  of  the  year. 

Speaking  of  the  volume  of  money — 

During  the  last  four  years  the  currency  has  been  contracted  directly  by  the 
withdrawal  of  3  per  cent  certificates— compound-interest  notes  and  7.30  bonds 
—outstanding  on  the  4th  March,  1869  (all  of  which  took  the  place  of  legal  ten- 
ders in  the  bank  reserves),  to  the  extent  of  $63,000,1X)0. 

During  the  same  period  there  has  been  a  much  larger  comparative  con- 
traction of  the  currency.  The  population  of  the  country  has  largely  in- 
creased. 

As  the  annual  increase  of  population  is  3i  per  cent,  to  even  keep 
pace  with  it,  if  we  did  nothing  else,  would  require  over  $50,000,000 
additional  currency  per  year.  We  should  issue  more  in  addition 
to  this  annual  demand  to  secure  any  increase  and  relief. 

In  a  full  discussion  of  this  question  of  circulation  we  should 
take  into  account  the  marvelous  increase  of  business  through  all 
the  various  new  appliances  and  rapid  development  of  our  coiintry. 
To  keep  up  with  this  alone  would  require  great  additions  to  our 
currency.  But  when  banks  desire  the  appreciation  of  money  and 
the  consequent  depreciation  of  prices,  what  care  they  for  the  ruin 
of  industry  and  property  prices? 
1770 


112 

If  we  compare  our  money  circulation  to  the  wealth  of  the  coun- 
try as  generally  estimated,  it  is  3^  per  cent.  We  ought  to  have 
more  nearly  5  per  cent  circulation. 

That  of  France  is  4  per  cent;  Belgium,  3.2  per  cent;  Italy,  3.1 
per  cent:  Portugal,  4.6  per  cent. 

With  oiir  greater  expanse  and  variety  of  business  and  our  peo- 
ple scattered  across  an  entire  continent  we  ought  to  have  more 
than  any  of  these. 

CHEAPER  MONEY  IS  NECESSARY  FOR  RELIEF  AND   EQUITY. 

The  same  question  is  pertinent  as  to  silver  coin  and  money 
coined  from  silver  in  possession  of  the  Grovernment. 

How  can  the  Government  get  this  silver  money  into  circulation 
if  it  does  coin  it? 

We  answer,  by  paying  it  out  in  current  expenses  and  on  aU  coin 
obligations.  But  our  opponents  wUl  say  tliat  by  issuing  paper 
money  or  silver  money  and  putting  it  into  circulation,  in  addition 
to  the  money  now  out,  will  so  increase  the  supply  or  volume  of 
money  in  circulation  that  money  will  become  too  cheap. 

This  is  the  plea  against  free  coinage  of  silver  and  is  also  against 
the  issue  of  legal-tender  notes  by  the  Government.  It  makes 
money  too  plentiful  and  too  cheap,  say  our  opponents. 

Too  plentiful  and  cheap  tor  whom? 

I  know  that  increasing  the  volume  by  adding  any  kind  of  money 
to  the  circulation  will  make  money  cheaper;  and  so  will  withdraw- 
ing money  from  circulation  make  money  scarce  and  dear  and  high 
in  its  purchasing  power. 

But  who  is  harmed  by  making  money  more  plentiful  and  cheap? 

Surely  not  those  who  have  been  suffering  from  falling  prices 
for  the  last  twenty-five  years  by  money  having  been  made  too  dear. 

I  have  never  uttered  a  word  favorable  to  a  careless  and  un- 
limited expansion  of  the  currency. 

I  have  protested  against  making  money  too  abundant  on  the 
one  hand,  and  against  making  it  too  scarce  and  dishonestly  dear 
on  the  other. 

But  the  coinage  of  all  silver  offered,  or  the  issue  of  a  certain 
amount  of  Government  legal  tender  strictly  limited  to  reasonable 
bounds,  as  I  have  suggested,  will  not  make  money  too  cheap  for 
all  who  own  or  produce  other  properties  than  money,  bonds,  and 
mortgages.  It  tends  to  bring  the  value  of  our  dollars  in  circula- 
tion back  again  to  that  ratio  to  property  and  price  that  formerly 
obtained. 

MOrJE  MONEY  MEANS  MORE  INVESTMENTS  IN  OTHER  PROPERTY. 

And  then  it  will  pay  to  invest  money  in  lands  and  products  of 
field,  farm,  and  factory,  for  profit  will  then  follow  these  indus- 
tries. 
1770 


113 

Even  bankers  would,  many  of  them,  seek  to  invest  money  in  the 
various  forms  of  property,  produce,  and  manufacture. 

Hear  what  Mr.  George  A.  Butler,  bank  president,  had  to  say  of 
the  advantages  accruing  to  property  if  silver  were  even  paid  out 
freely  on  our  coin  obligations  by  the  Secretary  of  the  Treasury. 

I  quote  his  testimony  before  the  Banking  and  Currency  Com- 
mittee of  this  House  on  December  13,  page  153  of  the  hearings: 

Mr.  Black.  I  will  ask  you  even  a  broader  question  than  that.  I  should 
like  to  get  your  opinion  as  to  the  effect  of  the  Government  establishing  the 
policy,  as  to  redeeming  this  paper  currency,  of  exercising  its  own  option 
whether  it  would  pay  in  silver  or  gold,  rather  than  to  let  the  holder  decide 
that  question  for  himself. 

Mr.  Butler.  I  can  not  answer  that  any  better  than  to  say  this:  The  very 
hour  that  I  am  convinced  that  the  Government  wUl  doit  I  will  sell  every  dol- 
lar's worth  of  personal  property  I  have  on  earth  and  invest  it  in  real  estate. 

Mr.  Ellis.  Why? 

Mr.  Butler.  Because  that  brings  the  country  to  a  silver  basis  and  elimi. 
nates  more  than  half  the  value  of  personal  property  in  the  form  of  stocks, 
bonds,  mortgages,  and  everything  of  that  sort. 

Mr.  Hall.  "Would  it  not  affect  real  estate  in  the  same  way  as  personal  prop- 
erty would  be  affected? 

Mr.  Butler.  No;  because  in  the  case  of  real  estate  you  can  put  up  the  rents 
in  iiroportion.  Before  the  last  election  I  was  intending  to  do  this,  and,  indeed, 
commenced,  but  then  the  election  occurred,  which  was  not  so  favorable  to  the 
silver  men,  and  I  thought  better  of  it  and  stopped. 

Remember  that  the  personal  property  to  which  he  refers,  as  he 
explains,  is  such  as  he  owns — "stocks,  bonds,  mortgages,  and 
everything  of  that  sort."  Personal  property,  the  product  of  fac- 
tory or  field,  goes  on  the  other  side. 

A  very  intelligent  friend  of  mine,  another  bank  president,  took 
the  same  position  with  me  in  conversation  on  the  silver  question. 
If  money  becomes  abundant  enough  to  raise  prices  and  make 
products  and  property  profitable,  then  even  the  bankers  will  in- 
vest in  property.  They  will  invest  on  the  side  of  property  if  it 
once  gets  out  from  under  the  domination  of  high  and  scarce 
money. 

They  see  as  clearly,  it  would  seem,  as  anybody,  that  with  an  in- 
creasing volume  of  money  the  property  side  of  this  controversy 
with  the  banks  will  become  profitable  by  reason  of  improved 
prices. 

efforts  of  chevalier  and  the  income  classes  of  EUROPE  TO  demon- 
etize GOLD  FORTY  YEARS  AGO— GOLD  DESPISED  IN  1863. 

Mr.  St.  John,  president  of  the  Mercantile  National  Bank,  New 
York,  said  before  the  committee: 

Our  "goldites"  would  dismiss  all  this  on  the  ground  of  an  overabundance 

of  silver.    Had  the  most  influential  doctrinaire  in  money  in  Europe  been  as 

influential  with  lawmakers  in  1853  as  our  aforesaid  tutor  was  influential  with 

law  dictators  in  1893,  France  would  have  closed  her  mints  to  gold.    Silver 

1770 8 


114 

monometallism  would  have  been  the  coinage  system  of  the  world.  Chevalier 
threatoned  France  with  an  abundance  uf  gold  as  cheap  and  overwhelming  as 
iron.  Silver  is  the  overabundant  in-odiction  of  our  influential  doctrinaires. 
Note,  however,  that  $.'),(KHt,(>00  worth  of  .silver  bullion  is  at  this  moment  an 
overestimate  for  the  world's  di.stributing  markets'  supplies  of  silver. 

Senator  John  P.  Jones  in  the  following  marks  the  parallel  be- 
tween Chevalier  and  the  French  bondholders  of  that  dtiy  and  the 
same  class  of  to-day: 

THE  EX.\.M1'LE  OF  FKANCE  IN  DEAT.ING  WITH  BONDHOLDERS. 

The  attempt  of  the  American  bondholder  to  get  the  woi-d  "coin"  erased 
from  his  contract,  and  to  get  written  into  its  place  some  word  which  would 
describe  a  coin  that  was  always  getting  dearer,  is  not  the  first  attempt  of  the 
kind  in  history.  A  similar  attempt  was  made  on  behalf  of  the  French  bond- 
holders after  the  discoveries  of  California  and  Australia.  Gold  was  then  the 
metal  that  was  becoming  cheap  money,  and  the  French  bondholders  took 
ready  alai'm  at  the  prospect  of  the  purchasing  power  of  their  incomes  being 
reduced  by  the  inflow  of  the  now  money.  They  found,  as  all  bondholders 
find  everywhere,  ready  and  pliant  agents  and  advocates  in  the  literary  guilds. 

Chevalier  and  those  in  arccord  witli  him  made  a  demand  for  the  payment  of 
the  bonds  of  the  French  Government  in  silver.  Their  cry  was  for  honest 
money.  It  is  the  same  cry  that  we  hear  now,  and  have  heard  for  more  than 
twenty  years.  It  was  a  demand  for  a  payment  of  the  money  that  was  be- 
coming dearer.  For  it  appears  that  when  money  is  becoming  dearer  it  is 
honest  money,  while  if  wheat  and  cotton  become  dear,  which  means  that 
money  is  Ijecoming  cheap,  the  wheat  and  cotton  are  dishonest  and  fraudulent. 

Chevalier  demanded  the  payment  of  the  bonds  in  silver.  In  order  that  the 
people  might  suppose  that  he  had  some  ground  in  reason  for  his  demand  he 
maintained  that  silver  had  always  been  the  money  of  France,  and  that  when 
people  bought  the  bonds  of  the  Government  they  supposed  they  were  buying 
bonds  payable  in  silver— very  much  the  same  sort  of  argument  that  has  been 
used  in  the  United  States,  except  that  in  this  country  the  demand  was  for 
bonds  payable  in  gold. 

This  ruse  did  not  work,  however.  The  oflicers  of  the  Government  refused 
compliance  with  the  demand.  They  declined  to  transfer  to  the  creditor  the 
option  which  the  jjeople  of  Prance  had  reserved  to  themselves.  That  they 
were  right  no  man  but  a  bondholder  could  have  the  hardihood  to  deny. 

Our  modern  Chevaliers  have  been  more  successful.    *    *    * 

He  (Chevalier)  was  arguing  that  gold  would  probably  depreciate  one-half 
in  purcha.sing  power.  It  was  for  the  national  creditor  that  his  sympathies 
were  aroused,  and  it  is  for  the  national  creditor  that  the  sympathies  of  the 
bankers  are  now  aroused. 

"All  commodities — " 

He  continued — 
excepting  gold  (the  money  that  was  growing  cheap)  and  every  kind  of  prop- 
erty excepting  that  of  which  the  incomes,  from  the  present,  fixed,  as  is  the 
case  with  Government  funds  ought,  from  the  moment  that  the  monetary 
crisis  is  terminated,  to  have  attained  in  a  gold  currency  double  the  price 
which  they  are  at  present  worth.'" 

His  opinion  then  was  that  the  nrice  of  commodities  and  of  property,  ex- 
cept Government  funds,  would  "double  in  price."  How  was  it  with  wages — 
the  reward  of  the  workingmen?  Were  they  to  continue  low  as  before  while 
prices  were  rising?    Chevalier  says: 

"It  will  be  the  same  eventually  with  the  wages  of  labor  [that  is  to  say, 
wages  would  double],  and  with  all  personal  services,  whether  rendered  in 
the  factory  or  on  the  farm  or  from  the  liberal  professions."    *    ♦    * 
1770 


115 

"It  is  another  class  of  persons,"  he  says,  "whom  we  have  previously  de- 
fined in  a  general  way  (the  national  creditors)  who  have  to  submit  to  a  sacri- 
fice in  the  proportion  to  the  fall  in  the  precious  metal." 

WILL,  HIGHER  PRICES  DRIVE  GOLD  TO  EUROPE? 

My  friend  from  New  York  [Mr.  Tracey]  ,  my  colleague  on  the 
Coinage  Committee,  now  kindly  honoring  me  with  his  attention, 
is,  however,  fearful  that  the  rise  of  prices  will  drive  gold  out  of 
the  country. 

There  are  a  few  points  that  I  wish  to  make  on  this  question  in 
addition  to  what  I  have  already  said. 

First.  Gold  in  export  goes  as  a  commodity  at  its  commodity 
value  in  exchange  for  other  commodities. 

Whatever  nation  bids  highest  for  gold  in  such  exchange — that 
is,  gives  greatest  quantity  of  other  goods  for  gold — will  get  the  gold, 
on  the  same  principle  that  they  would  get  wheat  or  any  other 
product  for  gold  in  international  trade  as  a  commodity,  to  be  bought 
as  such. 

When  prices  are  so  low  on  other  things  that  nations  can  better 
afford  to  take  them  instead  of  gold,  they  will  go  to  settle  balances 
of  trade,  and  gold  will  stay. 

When,  however,  prices  rise  on  other  articles  above  the  commod- 
ity or  mercantile  value  of  gold,  then  gold  will  go  out  in  export. 

It  flows  then  toward  countries  of  low  prices  on  other  articles. 
High  prices,  however,  can  not  obtain  on  other  articles  without 
money  volume  is  ample.  So  we  can  be  sure  gold  will  not  leave  us 
until  other  money  is  in  circulation  to  more  than  take  its  place — 
enough  more  to  raise  prices  of  other  property. 

Even  the  matter  of  distrust  regarding  our  bonds  and  securities 
abroad  so  often  mentioned  do  not  entirely  set  aside  these  economic 
forces,  as  some  suppose. 

Suppose  a  hundred  millions  in  bonds  should  be,  so  to  say,  sent 
back  to  us  from  England  suddenly. 

The  payment  is  not  necessarily  in  gold;  it  is  in  wheat  and  cotton 
if  they  can  take  them  to  better  advantages  in  exchange  for  our 
bonds,  and  that  depends  entirely  on  the  price  of  wheat,  cotton,  etc. 

Gold  will  not  go,  then,  unless  other  money  is  so  abundant  that 
prices  are  up  or  rising,  and  in  that  case,  mark  you,  we  can  easily 
spare  the  gold. 

We  can  get  along  without  it  while  other  money  is  sufficient  to 
keep  up  prices. 

If,  however,  we  have  bank  money  dependent  upon  gold  redemp- 
tion, bankers  must  hold  gold,  or  must  contract  their  paper  cur- 
rency at  the  same  time  gold  is  being  reduced  by  export,  then  the 
contraction  resultant  quickly  forces  prices  down  so  low  that  our 
other  products  will  be  taken  instead  of  gold. 
1770 


116 

Let  Government  issue  onr  paper  money  as  far  as  necessary  and 
silver  be  freely  coined,  then  the  outflow  of  gold  should  excite  no 
alarm,  for  our  money  is  siire,  founded  on  the  law  of  the  Govern- 
ment. 

Gold  going  abroad  under  these  conditions  would  be  profitable 
to  oiir  people  in  many  ways: 

First.  Having  other  good  money  to  take  its  place,  we  would  get 
for  it  value  in  other  things  more  than  it  would  be  worth  to  us  for 
money  uses. 

Second.  It  would  swell  the  prices  in  Europe  by  increasing  money 
volume  there  so  we  would  get  higher  prices  on  all  of  our  exports 
to  tiiose  countries. 

Third.  And  by  silver  being  accepted  at  our  mints  freely  at  $1.29 
per  ounce,  Europe  could  not  longer  buy  wheat  in  India  with  silver 
at  65  cents  per  ounce,  but  wheat  would  at  once  rise  to  meet  the 
new  price  on  silver. 

VALUABLE  MONETARY  FACTS— MOVEMENT  OF  GOLD. 

From  valuable  tables  by  Maurice  L.  Muhleman,  cashier  of  the 
United  States  svibtreasury  at  New  York,  found  in  his  Money  of  the 
United  States,  we  derive  the  following: 

Table  showing  gold  and  silver  movement  18755-1893.  page  60. 

From  1873  to  1877  exports  of  gold  were  against  us  $127,000,000  in 
a  period  of  silver  demonetization  complete,  neither  one  of  the  five 
years  securing  us  any  gold  by  international  trade. 

From  1878  to  1888,  the  first  period  of  coinage  of  silver  under  the 
Bland  Act.  we  gained  an  excess  of  import  over  export  of  gold  every 
year  amounting  in  six  years  to  §187,000,000. 

Coinage  of  silver  did  not  drive  out  gold,  therefore,  as  our  mono- 
metallists  claim,  but  had  the  direct  opposite  effect  of  increasing 
our  gold  by  trade  with  foreign  nations,  and  at  the  same  time  our 
product  of  gold  mines  was  increased  from  $184,000,000  during  the 
first  five-year  period  preceding  the  coinage  of  silver  under  the 
Bland  Act.  to  ,$200,000,000  during  the  next  five  years. 

After  the  passage  of  the  Sherman  silver-purchase  act  which  we 
were  told  would  drive  out  gold,  the  reverse  was  true  again,  for  we 
saved  all  our  product  and  gained  in  three  years,  July  1.  1890.  to 
July  1 ,  1893,  $156,000,000  by  international  trade,  gaining  $68,000,000 
of  this  the  first  year  after  said  act. 

Now.  since  the  repeal  of  all  laws  favorable  to  silver  we  are  losing 
gold  by  international  trade  at  an  alarming  rate,  and  that,  too.  while 
Europe  could  get  our  products  instead  of  gold  at  lower  rates  than 
ever  before. 

These  great  facts  and  experiences  are  all  against  the  claims  of 
the  advocates  of  silver  demonetization. 

On  silver  we  have  exported  more  than  we  imported  every  year 

1770 


117 

from  1873  to  1893,  as  shown  by  the  tables,  so  again  the  evidence  is 
that  by  reason  of  the  European  and  Oriental  demand  for  silver  for 
their  own  coinage  there  is  no  danger  of  silver  becoming  too  abun- 
dant by  free  coinage  in  America. 

In  studying  questions  of  banking,  it  will  be  well  to  notice  the 
growth  of  tiie  deposit  feature  of  banks  in  this  country. 

GROWTH  OF  DEPOSITS  IN  BANKS. 

We  give  the  following  on  the  authority  of  Muhleman,  page  59. 
The  period  from  1873  to  1893  is  the  period  we  have  taken: 

National-bank  deposits  start  at  $673,000,000  in  1873— siiver  demonetization  act. 

They  continue  nearly  same  for  six  years  to  $677,000,000,  in  1878— ending  de- 
monetization period. 

They  grow  next  six  years  to  $1,099,000,000,  in  1884— during  Bland  Act  period. 

They  grow  next  six  years  to  $1,759,000,000,  in  1890— during  Bland  Act  period. 

They  grow  next  two  years  to  $2,032,000,000,  in  1892— silver. purchase  period. 

So  the  growth  of  deposits  is  threefold  during  the  fourteen  years  of 
partial  silver  coinage,  and  practically  nothing  during  six  years  pre- 
ceding, and  they  drop  again  in  1893  to  1,575,000,000,  being  year  of 
purchase-clause  repeal.  Again  during  and  succeeding  panics  de- 
posits fall  short.  Notice  the  shrinkage  in  1877  and  1878, 1884  and 
1893,  panic  years.  State-bank  deposits  increase  nearly  fivefold, 
being  $111,000,000  in  1873,  and  increasing,  except  during  panic 
years,  to  $648,000,000  in  1892.  Savings-bank  deposits  increase  to 
more  than  double,  $802,000,000,  in  1873,  growing,  except  during 
panic  years,  to  $1,712,000,000  in  1892. 

People  seem  to  distrust  banks,  especially  national  and  State 
banks,  during  years  of  panic  or  financial  disturbances;  but  banks 
also  seem  to  distrust  the  people,  for,  as  Muhleman  points  oiit, ' '  the 
only  two  years"  wherein  cash  reserves  equaled  20  per  cent  of  de- 
posits were  1874  and  1885,  "  years  succeeding  panics." 

These  accumulations  of  cash  in  banks  following  panics  are  often 
claimed  to  be  evidences  of  abundance  of  money,  but  they  are  in 
fact  evidences  of  the  flow  of  money  out  of  active  channels  of  trade 
and  away  from  investments  into  the  money  centers  owing  to  the 
preceding  contractions  and  withdrawals  of  credit,  which,  break- 
ing down  prices,  render  all  business  and  property  investments 
unprofitable. 

If  we  take  New  York  City  and  large  cities  alone  we  VTill  find,  as 
to-day,  excessive  congestion  of  idle  money  in  the  money  centers. 

A  GLEAM  OF  LIGHT  ON  THE   MONEY  QUESTION  FROM  BOSTON. 

We  have  found  most  excellent  treatment  of  some  of  the  essen- 
tial elements  of  monetary  science  in  the  brief  monthly  letters  of 
Cox.  Bickf ord  &  Co. ,  bankers  and  brokers,  of  Boston. 

In  their  circular  letter  of  March  1,  1894,  they  say,  in  defining 
money  and  quoting  J.  S.  Mill: 

We  stated  in  our  February  letter  that  money  is  a  function  or  relation* 
1770 


118 

not  a  commodity;  that  its  vahte  can  not  be  intrinsic  underany  circumstances, 
nor  due  to  its  first  cost  of  production,  as  is  the  csise  in  the  general  range  of 
commodities,  but  is  clearly  expressed  in  what  it  exchanges  for;  i.  e.,  the  gen- 
eral i-ange  of  commodity  price. 

'•  The  value  of  money  is  to  ajipearance  an  expres.slon  as  precise,  as  free  from 
possibility  of  misunderstanding,  as  any  in  science.  The  value  of  a  thing  is 
what  it  will  exchange  for,  the  value  of  money  is  what  money  will  exchani^o 
for— the  purchasing  power  of  money.  If  prices  are  low,  money  will  buy  much 
of  other  things  and  is  of  high  value;  if  prices  are  high,  it  will  buy  little  of 
other  things  and  is  of  low  value.  The  value  of  money  is  inversely  as  general 
prices,  falling  as  they  rise  and  rising  as  they  fall."— JoHie.s  Sturirt  Mill. 

Beiore  such  an  authority  as  the  above,  and  such  a  plain  stat2m3Ut  of  thn 
value  of  money,  what  becomes  of  the  term  "the  intrinsic  value  of  money," 
so  often  repeated  as  to  have  become  a  popular  by-word,  a  plausible  false- 
hood, generally  credited  without  a  particle  of  proof  and  only  bearing  con- 
viction to  its  hearers  through  constant  reiteration. 

The  value  of  money  is  not,  and  can  not,  in  the  very  nature  of  its  function, 
be  intrinsic. 

"  The  value  of  money  is  inversely  as  general  prices,  falling  as  they  rise  and 
rising  as  they  fall."  and  therefore  dear  money  is  expressed  in  a  low  range  of 
prices,  while  cheap  money  attends  a  high  plane  of  general  prices. 

Contraction  is  the  oompression  of  prices  to  a  low  level,  always  attended  by 
dear  money,  while  inflation  is  the  expansion  of  prices  to  a  high  level,  finding 
expression  in  the  term  cheap  money. 

Falling  prices  is  the  sure  index  of  a  rising  value  in  money,  while  rising 
prices  is  the  exact  reverse,  or  an  indication  of  the  decreasing  value  of  money. 

The  stability  of  money  is  the  all-essential  of  an  honest  standard  of  value  and 
Is  of  inestimable  worth  in  maintaining  the  equilibrium  of  civilized  effort  and 
the  equitable  distribution  of  the  wealth  of  production. 

Unstable  money,  one  that  is  either  appreciating  or  depreciating  in  value,  is 
thoroughly  dishonest. 

These  are  siicli  clear-cut  statements  from  practical  bankers  that 
I  am  pleased  to  quote  them  as  indorsing  so  forcibly  what  I  have 
claimed  on  these  points: 

1 .  That  there  is  no  intrinsic  value  in  money. 

2.  That  volume  controls  and  regulates  value  of  money. 

3.  That  the  unstable  money  of  either  unduly  contracted  or  ex- 
panded money  is  dishonest  money. 

4.  That  the  value  of  money,  like  other  things,  is  what  it  will 
exchange  for  and  is  so  measured  by  the  general  range  of  prices. 

5.  That  money  is  a  function  and  not  a  commodity. 

BOTH   EQUITY  AND  PROSl'KHITY   DESTROYED  BY   FALLING  PRICES. 

Unstable  money,  caused  by  change  of  volume,. and  especialh- 
appreciating  money,  caused  by  contraction,  is  not  only  dishonest 
toward  i)eople  who  have  invested  monej'  in  property  and  i)r()ductive 
enterprises,  but  when  seen  in  its  action  on  those  who  have  con- 
tracts to  pay  in  dollars,  it  is  a  crime  that  even  ignorence  ought 
not  to  excuse. 

Look  to  the  range  of  prices  if  you  would  determine  the  extent 
and  grade  ot  variations  in  monej-. 

Tables  of  prices  covering  the  average  prices  of  a  certain  period 
1770 


119 


on  leading  commodities  have  been  prepared  by  many  able  statis- 
ticians to  determine  the  relative  value  of  money.  Such  averages 
over  quite  a  large  number  of  staple  articles  are  called  index 
numbers. 

Mr.  Augustus  Sauerbeck,  a  gold  monometalist  as  far  as  his 
interests  are  concerned,  made  a  most  thorough  set  of  price  aver- 
ages or  index  numbers  that  has  been  published  by  the  Royal  Sta- 
tistical Society  of  England. 

To  obtain  a  base  line,  or  starting  valuation,  with  which  to  com- 
pare the  range  of  prices,  he  takes  prices  in  gold  for  ten  years,  five 
of  which  precede  and  five  succeed  the  year  in  which  silver  was 
demonetized,  187b,  and  calls  this  average  100. 

This  will  show  the  value  of  gold  rising  in  nineteen  years,  given 
in  table,  to  nearly  double  its  purchasing  power  as  it  stood  in  1873, 
prices  falling  about  one-half  from  1873  to  1891.  I  quote  his  tables 
from  the  Boston  circular  mentioned,  in  which  the  various  prices 
of  commodities  are  averaged  in  grou^DS  of  different  lines  of  staples. 
I  have  also  added  from  another  source  Sauerbeck's  table  of  aver- 
age prices  of  silver  bullion  for  period  1874  to  1893  so  as  to  show 
.  how  silver  and  commodities  compare. 

Wholesale  gold  prices  of  commodities  in  England. 


8  u 

If 
> 

r 

1 

y 

JacS 
02 

13 

o 
o 

<4-l 

1 

1 

'S 

01 
3  CO 

CO 

03 

1 

a 

o 
El 

1 

o' 

13 

6 

On 

|i 

1-H  ^ 

1873 

106 
105 
93 
93 
100 
95 
87 
89 
84 
84 
82 
71 
68 
65 
64 
67 
65 
65 
75 

109 
103 
108 
108 
101 
101 
94 
101 
101 
104 
103 
97 
88 
87 
79 
83 
86 
83 
81 

106 
105 
100 
98 
103 
90 
87 
88 
84 
76 
77 
63 
63 
60 
67 
65 
75 
70 
71 

107 
104 
100 
99 
101 
96 
90 
94 
91 
89 
89 
79 
74 
73 
70 
73 
75 
73 
77 

141 
116 

101 
90 
84 
74 
73 
79 
■  77 
79 
76 
68 
66 
67 
69 
78 
75 
80 
76 

103 
93 

88 
85 
85 
78 
74 
81 
77 
73 
70 
68 
65 
63 
65 
64 
70 
66 
59 

106 
96 
93 
95 
94 
88 
85 
89 
86 
85 
84 
81 
76 
69 
67 
67 
68 
69 
69 

114 
100 
93 
91 
89 
81 
78 
84 
80 
80 
77 
73 
70 
67 
67 
69 
70 
71 
68 

111 

102 
96 
95 
94 

87 
83 
88 
85 
84 
83 
76 
73 
69 
(J8 
70 
73 
73 
73 

1874 

95  8 

1875  

93  3 

1876.. 

86.7 

1877  

90  2 

1878 

86.4 

1879 

84  2 

1880.. 

85.9 

1881 

85.0 

1883 

84.9 

1883 

83.1 

1884 

83.3 

1885  -. 

79.9 

1886 

74.6 

1887 

73.3 

1888 

70.4 

1889 

70.3 

1890 

78.4 

1891 

74.1 

1892 

65.4 

Mr.  Robert  Giffen,  statistician  of  the  London  Board  of  Trade, 
in  speaking  on  this  subject,  says: 

We  can  say  positively  that  the  recent  change  from  a  high  to  a  low  level  of 
prices  is  due  to  a  change  in  money  of  the  nature  or  in  the  direction  of  abso- 
lute contraction. 
1770 


120 

WHO  ARE  THE  INFLATIONISTS  OF  THIS  DAY? 

I  have  hinted  at  the  probabilities  of  inflation.  I  do  not  know  of 
any  Democrat  who,  contending  for  the  value,  safety,  and  perfect 
convenience  of  Treasury-note  legal  tenders,  has  ever  yet  on  this 
floor  proposed  such  a  loose,  gigantic,  and  uncontrolled  and  possible 
inflation  of  the  paper  money  of  the  country  as  do  the  advocates  of 
the  j)resent  and  pending  plans  of  issuing  currency. 

I  have  no  doubt  but  that  the  first  effect  of  the  adoption  of  the 
Carlisle  plan  would  be  an  inflation  of  the  currency. 

Neither  do  I  doubt  that  the  first  effect  of  this  inflation  would  be 
a  rise  in  prices  and  a  temporary  relief  for  the  people  generally. 

It  would  be  a  convenient  time  in  which  people  could  get  out  of 
debt  on  the  rising  prices,  great  profits,  and  general  prosperity. 

The  remonetization  of  silver  possibly  could  not  appreciate  prices 
or  cheapen  the  relative  value  of  money,  which  is  the  same  thing 
as  raising  general  range  of  prices,  so  rapidly,  nor  even  to  so  great 
a  degree,  as  could  be  done  under  the  inflation  of  currency  likely  to 
ensue  under  the  passage  of  the  so-called  currency-reform  bill  now 
pending.  It  would,  for  a  time  at  least,  set  the  people  free  from 
the  intolerable  monopoly  of  Wall  street. 

The  aggregate  volume  of  banking  capital  could  and  under  the 
temptations  for  multiplied  profits  I  believe  would  be  increased  to 
double  the  present  volume,  which  is  estimated,  in  round  numbers, 
to  be  $1,000,000,000,  and  indeed  it  might  easily  be  swollen  to  three 
times  the  present  amount  as  rapidly  as  men  of  wealth  perceived 
that  they  could  safely  to  themselves  have  the  free  and  unrestricted 
use  of  $100  for  every  $30  they  chose  to  deposit  with  the  Govern- 
ment in  Treasury  notes. 

It  is  useless  for  anyone  to  attempt  to  answer  me  on  this  point 
by  saying  that  they  would  be  restricted  to  the  $498,000,000  of  legal 
tenders  and  Treasury  notes  now  existing,  for  let  it  be  remembered 
that  all  currency  of  the  present  national  banks  now  issued  on 
bond  security  can  remain  out  under  the  proposed  amendments 
and  provisions  of  the  substitute  bill  offered  and  supported  by  the 
committee. 

The  $498,000,000  of  existing  Treasury  notes  as  a  30  per  cent 
safety  fund  deposit  provides  for  an  actual  inflation  of  the  currency 
on  top  of  existing  bank  issues,  which  are  permitted  to  remain  in 
circulation,  of  $1,600,000,000.  From  this  should  be  subtracted  the 
30  jjer  cent  reserve  to  find  the  extent  of  inflation,  which  would 
leave  over  $1,200,000,000. 

Does  any  Populist  on  this  floor  at  this  time  desire  to  distinguish 
himself  by  proposing  a  greater  inflation  than  this  by  one  single 
act  of  legislation? 
1770 


121 

The  famous  Coxey  public-road  bill,  wliich  bill  I  have  never  in- 
dorsed, although  favoring  a  proper  discussion  of  it,  only  proposed 
an  issue  of  $500,000,000,  and  even  this  he  did  not  propose  to  make 
redeemable  in  coin  on  demand  so  to  favor  gold  mongers. 

No,  Mr.  Chairman  and  gentlemen,  the  inflationists  of  to-day  are 
those  who  advocate  plans  for  bank  issues  of  currency.  I  have 
long  seen  that  this  great  cry  of  the  money  power  against  inflation 
meant  only  that  they  were  in  favor  of  contracting  Government 
legal-tender  issues  that  have  for  so  long  a  tin^e  furnished  a  safe, 
popular,  and  convenient  legal-tender  ciirrency  to  the  people,  but 
they  were  all  of  the  time  in  favor  of  allowing  inflation  of  bank  is- 
sues when  it  suits  their  private  interests  to  do  so. 

They  have  cried  out  against  fiat  money,  but  they  have  been  all 
of  the  time  favorable  to  alternate  expansions  and  contractions  of 
currency  under  the  fiat  of  the  bankers.  Many  common  laboring 
people  can  not  see  why  the  fiat  of  a  bank  is  better  than  the  fiat  of 
a  sovereign  Government. 

WHO  WANT  MONEY  TURNED  OUT  BY  PRINTING  MACHINES. 

They  have  cried  out  against  running  the  printing  machines  of 
the  Government  to  print  greenbacks  to  pay  out  to  the  people  for 
service  or  supplies,  but  they  have  all  along  been  in  favor  of  run- 
ning these  same  printing  machines  to  turn  off  millions  of  bank 
notes  that  they  might  loan  to  the  people  at  high  rates  of  interest. 
And  under  the  present  banking  system  they  have  insisted  that 
they  shall  draw  another  stream  of  interest  on  their  capital  de- 
posited in  th§  form  of  United  States  bonds. 

Surely  the  national  bank  forces  understand  that  it  makes  a 
great  difference  to  them  ' '  whose  ox  is  gored. " 

I  believe  there  are  gentlemen  on  the  floor  of  this  Chamber  who 
would  split  their  throats,  even,  if  thej'-  did  not  endanger  the  solidity 
of  the  cerulean  skylights  above  them,  in  their  efforts  to  decry  any 
proposition  to  issue  circulating  notes  to  farmers,  merchants,  man- 
ufacturers, or  any  other  class  of  citizens  to  any  extent  whatever 
upon  their  deposit  of  30,  40,  50,  or  even  100  per  cent  of  theii-  capi- 
tal, or  property,  or  titles  to  property. 

Yet  these  same  Congressmen  will  vote  and  work  for  the  passage 
of  this  bill,  which  proposes  to  issue  millions  upon  millions  of  notes 
to  the  banks  with  unrestricted  opportunity  for  them  to  put  the 
same  into  circulation  upon  their  deposit  of  30  per  cent  of  the 
amount  of  their  circulation  in  that  same  despised  fiat  paper  that 
they  have  sought  so  long  to  discredit. 

To  my  mind,  the  jewels  of  consistency  do  not  shine  abundantly 
on  the  shirt  fronts  of  such  fellows. 

1770 


122 

THE   PROPOSED  COIN  REDEMPTION  BY  THE  BANKS. 

But  the  Democratic  advocates  of  this  measure,  if  the  term  were 
l)t'nnissible.  tell  us  that  they  propose  to  relieve  the  Government 
of  the  responsibility  of  coin  re(lenip1;ion  of  all  of  this  volume  of 
bank  currency  and  throw  that  burden  on  the  banks  and  off  the 
shoulders  of  the  Government. 

How? 

This  bill  fails  to  make  any  such  provision.  As  long  as  any  Treas- 
ury legal  tenders  are  out,  and  practically  also  as  long  as  coin  cer- 
tificates are  out,  they  can  redeem  them  in  these. 

If  they  shall  struggle  to  accumulate  gold  in  which  to  redeem 
these  notes,  notice  the  condition  of  competition  for  gold  in  which 
they  place  the  Government.  Does  any  one  believe  that  if  any  sin- 
cere effort  of  the  banks  to  accumulate  gold  coin  in  quantities  suf- 
ficient to  redeem  any  adequate  supply  of  paper  currency  were 
made  that  there  would  be  any  chance  for  the  Government  to  main- 
tain gold  paj-ments  of  all  of  its  maturing  coin  obligations  and  its 
current  expenses?  Hear  Mr.  St.  John  again  regarding  ability  of 
banks  to  redeem  in  gold  (Hearings,  page  345): 

Mr.  Johnson  of  Indiana.  What  is  your  opinion  of  section  10  of  the  Carlisle 
bill* 

Mr.  St.  John.  My  opinion  of  that  is  just  what  I  said  when  I  came  here,  that 
it  is  absolutely  impossible  for  the  banks  of  the  United  States  to  redeem  a  liberal 
issue  of  bank  notes  in  gold.    The  possibility  d(;es  not  exist. 

The  Government  now,  without  any  serious  competition  from 
the  banks,  is  unable  to  keep  up  a  supply  of  gold  on  its  present 
methods. 

What,  then,  when  4,000  to  10.000  banks  enter  the  field  against  the 
Government  for  the  gold  supply,  to  say  nothing  of  the  strained 
conditions  that  this  situation  would  produce  in  Europe  as  well? 

The  retirement  as  a  safety  deposit  of  $335,000,000  of  legal  ten- 
ders that  the  committee  speak  of  as  the  probable  result  of  the 
proposed  act  does  not  prevent  the  withdrawal  of  gold  from  the 
Treasury  by  any  holders  of  other  coin  obligations,  as  well  as 
holders  of  the  remaining  legal  tenders.  So  there  is  practically  no 
relief  on  the  Treasury  holdings  of  gold  on  this  theory. 

But  if  there  were,  still  the  annual  expenditures  of  the  Govern- 
ment must,  on  the  vicious  "  parity  "  idea,  be  payable  on  demand 
in  gold.  So,  after  all,  the  burden  of  maintaining  the  gold  stand- 
ard still  rests  on  the  Government. 

A  permanent  and  reasonable  expansion  is  desirable. 

Let  no  man  conclude  that  I  am  opposing  an  expansion  of  the 
currency  either  by  silver  coinage  or  by  the  issue  of  full  legal-tender 
notes  by  the  Government  because  they  find  me  opposing  the  power 
of  the  banks  to  expand  the  currency  under  the  Carlisle  bill. 
1770 


123 

Expansion  by  tlie  banks  means  also  contraction  by  the  banks  as 
soon  as  they  may  desire  it  and  are  able  to  associate  for  it — which 
power  of  combination  is,  however,  doubtful  under  this  Carlisle 
bill;  ' '  hence  these  tears. "  Either  this  or  it  means  a  collapse  more 
ruinous  and  more  widely  extended  than  any  the  world  has  yet 
seen  by  the  gold  redemption  trick  that  promises  yet  never  fulfills. 

It  is  the  dangerous  elasticity  quality  of  bank  issues  that  I  oppose, 
rendered  still  more  dangerous  by  destroying  legal  tenders. 

It  is  the  perfectly  safe  and  efficient  expansion  of  currency,  both 
of  coin  and  legal-tender  Treasury  notes  by  the  National  Govern- 
ment, in  proper  form  and  quantity  that  I  uphold,  well  knowing 
that  this  will  prevent  the  manipulation  of  currency  voUime  and 
property  prices  by  the  banks,  and  that  equity  can  be  easily  main- 
tained when  the  Government,  recognizing  that  the  money  ques- 
tion is  also  and  essentially  the  property  question,  shall  turn  its 
attention  to  rendering  property  and  industry  safe,  prices  secure, 
and  equity  to  the  debtors  safe  by  constancy  of  circulation. 

CAN  THE  BANKS  MAINTAIN  THE  GOLD  STANDARD? 

But  let  us  suppose  for  the  moment  that  the  legal  tenders  were 
all  retired  by  the  30  per  cent  safety  fund,  and  that  by  surplus  reve- 
nues enough  could  be  seciired  in  gold  (although  no  one,  so  far.  has 
been  able  to  precisely  explain  how)  to  payoff  maturing  bonds  and 
interest  on  the  public  debt;  and  suppose  enough  of  the  present 
national  bank  issues  are  kept  in  circulation  according  to  provisions 
of  the  amended  substitute  bill  to  permit  the  Government  to  re- 
ceive them  and  pay  them  out  except  on  import  duties  and  public 
interest  as  now  provided  by  law  in  current  expenses;  and  suppose 
that  the  Secretaries  of  the  Treasury  continiTe  the  policy  of  keeping 
silver  coins  and  coinage  in  complete  subordination  to  gold  under 
the  anomalous  pretense  of  keeping  it  equal  ("at  a  parity '")  with 
gold,  yet  continue  to  receive  silver  in  customs  dues  as  now? 

And  suppose,  however  difficult  it  may  seem  to  some  suspicious 
mortals,  that  all  of  the  banking  corporations  are  honest  and  earnest 
in  efforts  to  keep  a  fiall  supply  of  gold  coin  on  hand,  both  in  their 
own  vaults  and  at  the  redemption  agencies  designated  for  them, 
so  that  they  can  also  maintain  the  gold  standard  of  payment  and 
note  redemption,  and  thus  maintain  their  honor  and  dignity,  and 
at  least  consistency  in  turning  out  gold,  '  •  the  money  of  the  world, " 
instead  of  the  despised  fifty-cent  silver  dollars  that  they  say  is  such 
a  cheat  and  swindle  for  creditors  when  forced  upon  them.  Sup- 
pose all  of  these  in  accordance  with  the  arguments  and  claims  of 
our  opponents,  then  what  will  be  the  financial  condition  and  the 
probabilities  of  the  banks  maintaining  coin  redemption? 
1770 


124 

Here  is  the  showing: 

Circulation  on  $498,000,000  deposited $1,660,000,000 

Present  bank  notes  retained 200, 000, 000 

Due  on  deposits,  all  banks,  estimated 3, 738, 418, 819 

Total  bank  debt  payable  in  gold 5,588,  418,819 

Gold  (probable)  accumnlations  in  banks 350, 000, 000 

Uncovered  paper  and  obligations 5, 238, 418, 819 

We  here  have  less  than  §  1  in  gold  Avith  which  the  banks  can  redeem 
about  $15,  or  in  actual  test  $350,000,000  resting  honestly  and  cer- 
tainly on  gold  basis,  and  $5,238,418,819  resting  on  the  pale  blue  air 
of  confidence. 

Does  anyone  believe  that  gold  redemption  could  be  maintained 
against  the  first  ripple  of  suspicion  that  would  come  against  the 
banks?  To  maintain  public  confidence  the  people  have  a  right  to 
demand  an  intelligent  basis  for  that  confidence.  Why  prate  about 
wanting  to  establish  public  confidence,  and  constantly  abuse  that 
confidence?  The  basis  here  when  examined  shows  that  there  is 
no  just  groimd  for  confidence,  and  the  whole  superstructure  would 
collai)se  on  first  disturbance. 

But  this  is  not  all.  The  total  stock  of  gold  coin,  by  last  annual 
report  of  the  Secretary  ot  the  Treasury,  in  reserve  and  in  circula- 
tion November  1  was  $564,738,578.  Ot  this  the  national  banks  held 
only  small  amount,  their  entire  holdings  of  specie  (gold  and  silver 
both)  on  October  2, 1894,  was  $237,250,654.  In  the  above  estimates, 
however,  I  have  allowed  that  the  banks  might  possibly  accumu- 
late $350,000,000  in  gold,  leaving,  say,  only  $50,000,000  in  Treasury 
and  $164,000,000  in  circulation  among  the  people  in  gold. 

While  considering  the  vast  superstructure  of  bank  obligations, 
resting  on  gold  basis  ot  less  than  one-tenth  the  i^romises  of  the 
banks,  let  us  also  notice  that  the  total  debt  of  all  kinds  in  the 
United  States  is  $20,000,000,000,  and  all  of  this  is  resting  on  a  pivot 
of  $564,000,000  gold,  which  is  less  than  3  cents  in  gold  on  the  dol- 
lar of  debt. 

The  imjjossibility  of  maintaining  gold  redemption  by  the  banks 
is  clear  to  every  conservative  mind  that  will  study  the  facts. 

Even  with  unlimited  coinage  of  silver  the  redemption  of  such  a 
superstructure  of  credit  in  both  gold  and  silver  is  still  exceedingly 
doubtful. 

If  anyone  believes  I  have  estimated  the  issues  of  bank  paper 

too  high,  let  him  remember  that  if  the  whole  body  of  legal  tender 

is  not  deposited  in  the  30   per  cent  safety  fund  which  would 

give  the  $1,660,000,000  circulation,  as  in  my  estimate,  then  what- 

1770 


125 

ever  is  not  so  used,  remains  in  circulation  and  can  be  used  to 
pump  gold  out  of  the  Treasury,  as  now,  being  used  over  and  over 
again.  It  would  leave  the  Government  still  responsible  for  the 
redemption  in  gold  and  throw  it  in  sharper  competition  with  the 
banks  in  the  general  scramble  for  gold. 

What  is  the  remedy? 

First.  Bmietallic  basis  by  free  coinage  of  silver  so  to  enlarge  the 
money  of  specie  redemption. 

Second.  Pay  out  silver  as  well  as  gold  at  the  option  of  the  G-ov- 
ernxnent,  and  as  its  own  interests  might  appear. 

Third.  Suppress  bank  circulation  and  issue  legal-tender  Treas- 
ury notes  instead,  and  increase  the  volume  to  equalize  against 
any  or  all  exports  of  either  metal. 

THE  BLAND  FREE  COINAGE  SUBSTITUTE  BILL. 

To  this  end,  and  as  the  nearest  approach  possible  at  present 
time  to  a  complete  remedy  and  safe  American  system  of  money, 
for  the  protection  of  all  against  the  schemes  of  the  European  gold 
power  and  all  of  its  Tory  allies  in  this  country,  I  shall  favor  and 
vote  for  the  Bland  free-coinage  substitute. 

It  provides  first  for  the  unlimited  coinage  of  silver  at  the  old 
ratio,  to  the  end  that  silver  coinage  may  be  restored  to  the  Amer- 
ican people  from  whom  it  was  taken  away  by  the  cunning  and 
treachery  of  the  Anglo-American  gold  and  bond  conspiracy. 

Bimetallism  and  the  equal  coinage  of  both  gold  and  silver  into 
standardmoney  without  discrimination  against  either,  and  without 
any  entangling  foreign  alliances  or  agreements,  is  the  best  possible 
salvation  for  the  maintenance  of  property  values  and  prices  and 
redemption  of  debtors  in  this  country. 

Persistency  in  the  appreciation  of  money  in  the  mad  career  after 
a  gold  standard  will  yet  bring  wheat  and  cotton  and  the  general 
range  of  prices  still  lower,  and  this  means  the  ruin  of  a  majority 
of  business  men  in  all  the  ordinary  lines  of  business. 

"Why  further  enslave  our  people  to  the  money  dealers  and  in- 
come classes? 

The  people  must  and  will  ultimately  destroy  every  political* 
party  that  ui^holds  the  gold  conspiracy,  or  their  ability  to  main- 
tain freedom  and  equity  is  gone  forever. 

The  second  section  of  the  Bland  substitute  bill  provides  for  the 
issuance  of  coin  notes  for  all  depositors  of  gold  or  silver  who  pre- 
fer paper  money  to  coin  for  currency,  and  these  notes  shall  be  full 
legal  tender. 

It  is  safe  to  say  that  nineteen-twentieths  of  our  people  prefer 
legal-tender  paper  money  to  either  gold  or  silver  for  general  use, 
and  so  any  satisfactory  system  of  money  issues  must  provide  for 
a  legal-tender  paper  money. 
1770 


120 

The  third  section  provides  for  the  redemption  of  these  coin  notes 
in  either  gold  or  silver  at  the  option  of  the  Government,  and  pro- 
poses to  enact  into  law  the  declaration  of  our  last  National  Demo- 
cratic Convention  that  there  shall  be  no  discrimination  against 
either  gold  or  silver  coin  in  redeeming  either  coin  notes  or  other 
Treasury  notes  now  in  circulation. 

It  proxades  also  for  the  retirement  of  gold  and  silver  certificates, 
and  issuance  of  legal-tender  coin  notes  in  lieu  thereof. 

The  fourth  section  provides  for  depositing  gold  or  silver  coins 
and  recei%-ing  coin  notes  in  exchange  at  any  subtreasury  of  the 
United  States. 

The  aggregate  volume  of  coin  notes  put  in  circulation  must  not 
exceed  the  coin  and  bullion  in  the  possession  of  the  Government 
except  in  emergencies  caused  by  panic  or  stringency  in  the  money 
market.  The  Secretary  of  the  Treasury  may  at  his  discretion  issue 
coin  notes  against  United  States  bonds  deposited  with  the  Govern- 
ment, but  the  interest  on  such  bonds  while  deposited  shall  accrue 
to  the  Government. 

The  limit  of  issue  in  emergencies  is  such  that  the  coin  and  bul- 
lion shall  not  fall  at  any  time  below  60  per  cent  of  the  aggregate 
volume  of  coin  notes  outstanding. 

Section  5  provides  that  the  coin  notes  may  be  reissued. 

EXCELLEXT  FEATURES  OF  THE  BLAND   PROPOSITION. 

First.  In  the  provisions  of  this  bill  it  will  be  observed  that  all 
money  coined  or  issued  under  it  is  Government  money  and  legal 
tender. 

Second.  That  the  volume  is  automatically  controlled  in  relation 
to  the  aggregate  amount  of  coins  and  bullion  in  possession  of  the 
Government  by  present  stock,  by  exchange,  or  by  deposit. 

Third.  That  ready  expansion  of  the  volume  of  coin  notes  is  pro- 
vided for  to  meet  panic  and  emergencies  to  all  persons  or  asso- 
ciations in  exchange  for  deposited  interest-bearing  bonds. 

Fourth.  The  interest  on  deposited  bonds  is  retained  by  the  Gov- 
ernment while  on  deposit  instead  of  being  paid  out  to  the  persons 
or  associations  depositing  them.  This  is  right.  Why  should  the 
Government  furnish  emergency  currency  to  anybody  and  pay 
them  interest  on  its  own  bonds  at  the  same  time? 

Fifth.  This  is  an  elasticity  where  banking  associations  have  no 
monopoly  of  control  as  to  contractions  and  expansions,  and  gives 
all  classes  equal  chance  to  obtain  emergency  circulation. 

Sixth.  It  leaves  the  national -bank  system  intact,  but  destroys 
their  ability  to  control  volume  and  force  a  panic  or  stringency  to 
the  ruin  of  all  others. 

1770 


127 

Seventh.  It  provides  for  a  perfectly  safe  and  immediate  expan- 
sion of  tlie  volume  of  money  in  circulation. 

Eighth.  It  at  once  relieves  the  Treasury  from  any  further  dan- 
gerous drainage  of  its  gold  supply  and  establishes  an  immediate 
and  sure  parity  between  gold  and  silver  by  admitting  both  metals 
at  a  parity  to  the  mints  and  in  payment  of  all  coin  obligations, 
and  thus  secures  their  full  utilization  at  the  old  standard  ratio  as 
standard  money  metals. 

I  can  not  see  on  what  grounds  any  sincere  and  patriotic  Repre- 
sentative can  oppose  this  bill  with  so  much  of  relief  and  safety  in 
it,  and  at  a  time  when  both  of  these  things  are  needed.  It  will  be 
notice  to  the  world,  and  especially  to  the  gold  conspiracy,  that 
America  is  yet  to  be  maintained  and  governed  in  the  interest  of 
Americans. 

We  have  already  spoken  of  the  questions  of  elasticity,  convert- 
ibility into  coin,  and  so-called  security  of  note  holders.  We  wish 
now  to  briefly  refer  to  that  subject  again. 

ELASTICITY  AT  OPTION  OF  THE  BANKS  IS  DANGEROUS. 

The  advocates  of  bank  issues  seem  to  believe  that  elasticity, 
convertibility,  and  ultimate  security  are  the  great  and  necessary 
elements  for  the  regulation  of  the  currency. 

On  the  question  of  elasticity  we  have  shown  that  it  is  equivalent 
to  sudden  contraction  and  expansion  at  the  option  of  the  issuing 
banks;  that  is  intended  by  them. 

This  is  one  point  of  the  greatest  possible  danger  of  any  scheme 
of  bank  issues,  for  it  allows  the  appreciation  and  depreciation  of 
the  purchasing  power  of  money  to  be  constantly  manipulated  in 
the  interest  of  the  associated  banks  and  to  the  detriment  and  fre- 
quent ruin  of  all  others. 

The  appreciation  of  dollars  means  the  certain  depreciation  of 
everything  that  the  dollar  measures,  and  so  the  interests  of  the 
people,  the  property  holders  and  producers,  are  in  this  respect 
directly  opposite  that  of  the  money  dealers.  This  simple  fact 
seems  forever  to  be  overlooked  by  those  who  favor  allowing  the 
banks  to  manipulate  the  volume. 

Elasticity  at  the  option  of  the  banks,  and  without  regard  to  the 
interests  of  the  people,  is  therefore  to  be  avoided. 

Adequate  supply  of  money  in  circulation  independent  of  bank 
control  is  the  sure  safeguard  to  maintain  prices  and  the  equities 
of  contract,  and  prevent  panics  and  monetary  stringency. 

CONVEBTIBILITY  DOES  NOT  CONTROL  VOLUME. 

Neither  will  convertibility  into  coin  furnish  any  safe  regulation 
of  the  banks  in  the  issuance  of  notes  to  circulate  as  currency. 
All  bank  notes  are  issued,  and  will  be  issued  under  any  of  these 
1770 


128 

systems,  upon  the  theory  that  there  is  a  dollar  in  coin,  or  as  now 
in  United  States  legal-tender  Treasury  notes,  held  in  reserve  with 
which  to  redeem,  if  called  upon  to  do  so,  every  dollar  issued.  But 
we  know,  and  the  people  know,  that  in  tlie  practical  workings  of 
the  banks  this  is  not  true.  If  banks  were  compelled  to  keep  in  re- 
serve $1  in  Government  coin  or  Treasury  notes  for  every  dollar 
they  issue,  they  would  not  issue  such  notes. 

Tliey  could  just  as  well  put  out  or  loan  out  the  coin  and  Govern- 
ment notes  themselves  as  to  hold  them  against  circulating  notes 
dollar  for  dollar  in  amount. 

The  only  inducement  to  the  banks  for  issuing  their  own  notes  for 
currency  is  in  the  privilege  or  opportunity  to  promise  to  pay  more 
dollars  than  they  hold  in  reserve  against  those  promises. 

Their  profits  on  circulation  arise  wholly  upon  the  practice  of 
increasing  the  circulation  above  the  reserve,  and  the  more  they 
are  permitted  to  owe  the  people  on  their  circulation  the  gi'eater 
their  profits.  They  draw  interest  on  what  they  owe,  which  en- 
courages them  to  put  out  larger  quantities  of  their  promissory 
notes. 

Sir  Robert  Peel  was  quoted  before  the  Currency  and  Banking 
Committee  of  this  House,  page  249,  and  his  words  should  be 
heeded: 

It  appears  to  me  that  we  have,  from  reasoning,  from  experience,  from  the 
admissions  made  by  the  issuers  of  paper  money,  abundant  ground  for  the 
conclusion  that  iinder  a  system  of  unlimited  competition,  although  it  be  con- 
trolled by  convertibility  into  coin,  there  is  not  an  adequate  security  against 
the  excessive  issue  of  promissory  notes. 

Thus  we  have  his  own  clear  statement  that  from  reason,  taking 
hold  of  the  nature  of  the  case,  from  experience,  the  lesson  of  his- 
tory, and  from  admissions  of  the  bankers  themselves,  the  control 
of  the  volume  of  note  issues,  even  with  convertibility  into  coin  as 
a  requirement,  could  not  safely  be  left  to  the  banks,  although 
there  were  probably  not  more  than  the  twentieth  part  as  many 
banks  then  to  regulate  as  in  our  country. 

Notice  also  that  convertibility  into  coin  was  a  greater  limita- 
tion than  convertibility  into  any  form  of  legal  tender,  as  well  as 
coin  contemplated  by  these  banking  schemes. 

One  will  ask  me  if  I  would  deny  to  the  banks  the  privilege  of 
loaning  their  capital  to  merchants  and  business  men  when  needed. 

Certainly  not;  let  them  loan  all  the  capital  they  choose  and  all 
the  spare  money  they  have  on  hand,  as  any  otlier  business  firm 
could  do,  but  never  permit  them  to  make  their  promissory  notes 
a  permanent  part  of  the  currency  in  circulation. 

1770 


129 

SECURITY  TO  NOTEHOLDERS  DOES  NOT  CONTROL  VOLUME. 

The  ultimate  payment  of  their  notes  may  be  as  secure  as  the 
payment  promised  in  the  notes  and  obligations  of  other  branches 
of  business,  although  banks  are  not  in  the  habit  of  giving  any- 
thing near  such  strong  security  to  the  holders  of  their  notes  as 
they  require  from  others.  Yet  let  me  say  that  all  plans  of  security 
based  upon  assets  and  liens  and  double  liability  and  partial  re- 
serves will  still  fail  to  prevent  the  manipulation  of  the  volume  of 
notes  in  circulation  to  the  constant  advantage  or  supposed  ad- 
vantage of  the  banks. 

The  theory  of  ultimate  redemption  and  strong  security  for  the 
notes  they  issue  when  they  are  allowed  to  draw  intei'est  instead 
of  being  compelled  to  pay  interest  on  their  notes,  does  not  prevent 
even  bankers  (sacred  as  their  calling  seems  to  be  in  the  minds  of 
many  Congressmen)  from  giving  way  to  the  strong  temptations  be- 
fore them. 

The  burdens  of  interest  on  other  lines  of  business  on  what  debts 
they  owe,  tend  strongly  to  keep  up  their  efforts  to  lessen  their  in- 
debtedness, while  profits  on  notes  issued  for  circulation  by  bank- 
ers lead  to  efforts  to  increase  their  note  issues,  and  as  far  as  pos- 
sible keep  the  debt  out  perpetually. 

Even  United  States  bonds  as  security  afford  us  no  protection  as 
to  volume  of  bank  issues  and  expansion  and  contraction  by  the 
banks,  unless  we  have  a  limit  on  bond  issues,  and  that  seems  dif- 
ficult to  enforce  on  recent  Administrations.  I  have  long  felt 
that  if  our  money  system  could  be  so  simplified  as  to  have  only 
three  kinds  in  circulation  it  would  be  far  better  for  the  people, 
and  besides  they  could  better  understand  the  subject  in  all  finan- 
cial discussions.  I  would  have  gold  and  silver  freely  coined  at  16 
to  1  for  all  who  bring  them  to  the  mint,  and  in  addition  United 
States  Treasury  notes,  and  all  of  these  made  full  legal  tender;  and 
all  other  kinds  of  money  funded  or  changed  into  these  three  kinds 
as  fast  as  possible. 

I  have,  however,  prepared  a  table  showing  the  status  of  all  of  our 
different  kinds  of  money,  as  far  as  can  conveniently  be  done,  as 
they  stand  at  this  date, 
1770 9 


130 


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1770 


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131 

ADDITIONS  TO  TABLE  OF  LEGAL  STATUS  OF  UNITED  STATES  MONET. 

1.  Subsidiary  coins  are  issued  up  to  the  needs  of  the  country, 
coined  of  standard  or  nine-tenths  fine  silver,  on  basis  of  385.8 
grains  to  the  dollar;  into  10-cent  (or  dimes),  25-cent,  and  50-cent 
denominations.  They  are  legal  tender  in  sums  not  exteeding  $10, 
exchangeable  for  minor  coins,  and  redeemable  in  "lawful  money  " 
at  the  United  States  Treasury  in  sums  of  $20  or  any  multiple 
thereof. 

2.  Minor  coins  are  the  5-cent  piece,  made  77.16  grains,  being  three- 
fourths  copper  and  one-fourth  nickel,  and  the  1-cent  piece  of  48 
grains,  95  per  cent  copper  and  5  per  cent  tin  and  zinc.  They  are 
issued  up  to  the  needs  of  the  covintry,  legal  tender  not  to  exceed 
25  cents,  and  redeemable  at  Treasury  in  sums  of  $20  or  more. 

3.  National-bank  notes — The  Treasurer  of  the  United  States  on 
examining  this  table  says  the  clause  attributing  limited  legal 
tender  to  national-bank  notes  seems  not  quite  warranted  by  lan- 
guage of  the  statute. 

APPEAL. 

I  have  endeavored  to  present  to  you  the  greater  facts  and  more 
fundamental  principles  of  the  money  question.  Will  you  heed 
them  and  forever  remember  that,  other  things  being  equal,  the 
volume,  that  is,  the  number  of  units  in  circulation  in  a  nation,  con- 
trols the  general  range  of  prices  of  commodities  that  the  people 
must  produce  and  exchange  to  pay  the  various  monetary  obliga- 
tions of  modern  civilization  and  supply  themselves  with  the  neces- 
saries of  civilized  life.  The  money  question  is  a  question  of  prop- 
erty and  prices. 

Prices  regulate  profits  in  all  industries. 

Profits  are  necessary  to  equitable  employment  of  labor. 

Money,  prices,  profits,  employment,  equity  of  payments,  all  of 
these  are  necessary  to  prosperity  and  freedom. 

In  the  face  of  these  all-important  principles,  will  you  betray  all  of 
them  into  the  further  control  of  the  banks  and  the  Anglo-Amer- 
ican gold  conspiracy? 

Will  you  betray  the  people  of  your  country,  70,000,000  of  them, 
with  upturned  faces  looking  out  of  discouragements  and  unjust 
sufferings  to  you  who  sit  here  in  the  high  places  of  legislative 
power,  praying  for  relief  and  deliverance  from  the  gold  power? 

Have  you  neither  sense  of  justice  nor  sense  of  official  obligation, 
nor  a  heart  for  the  suffering  of  the  trustful,  yea,  the  too  trustful 
people,  who  have  sent  you  to  this  Chamber  to  legislate  for  them? 
If  not,  yet  humanity  must  exist,  despite  the  betrayal  of  those  lifted 
into  political  power.  And  when  once  aroused  and  indignant  at  in- 
justices long  suffered,  the  people  mount  to  the  chariot  and  ride  on 
and  over  the  entrenchments  of  selfishness  and  error  with  a  ven- 
1770 


132 

geance  and  unsparing  cruelty  that  remind  us  ot  God's  greater 
forces  in  wind  and  storm  that  show  no  respect  of  persons. 

There's  a  cry  among  the  needy,  there's  a  wrong  on  every  side; 

For  the  bankers  take  the  harvest  and  the  reaper  is  denied. 

Now  the  king  mounts  to  his  chai-iot,  whose  warning  was  defied. 
For  the  rising  sons  of  freedom  shall  soon  come  marching  on. 

In  the  old  Plutonian  temple  there's  an  image  made  of  gold, 
Where  his  worshipers  assemble  in  their  revels  as  of  old. 
But  a  Samson  now  is  feeling  for  its  pillars,  we  are  told. 

Then  arouse  the  sleeping  people,  and  forward,  men,  march  on. 

But  a  greater  poet  said  also: 

But  life  shall  on  and  upward  go; 

The  eternal  step  of  progress  beats 
To  that  great  anthem,  calm  and  slow. 
Which  God  repeats. 
So  sang  Whittier  for  the  reformers  of  his  day,  when  the  arro- 
gance of  the  slave  power  threatened  the  overthrow  of  the  nation. 
It  was  not  long  after  that  he  sang  of  the  victory,  saying,  with  true 
poetic  fire: 

Loud  and  long 

Lift  the  old  exulting  song. 

BEHOLD  A  CLOUD  OP  WITNESSES  FOR  JUSTICE. 

I  am  a  fiiin  believer  in  the  ultimate  victory  of  America  over 
monetary  conspiracies.  We  have  all  things  about  us  in  this  glori- 
our  country  to  encourage  us  to  persist  in  the  line  of  justice  and 
patriotism. 

Our  plains  are  fertile,  covered  over  with  waving  fields  of  abund- 
ant and  ntitritious  grain. 

Our  mountains  are  beautiful,  often  majestic,  and  always  beckon- 
ing to  highest  thought  and  bravest  action. 

The  statues  of  our  heroes  and  statesmen  range  themselves  in 
ever-increasing  numbers  along  the  aisles  and  corridors  of  our  pub- 
lic buildings  to  inspire  to  noble  action. 

Our  homes  for  the  people,  whether  cabin  or  palace,  show  the 
efforts  and  aspirations  of  the  Americans  for  beauty  and  comfort, 
and  justice  and  peace. 

Our  schoolhouses,  colleges,  universities,  bedeck  our  hills  with 
greater  strength  and  promise  for  the  maintenance  of  the  state 
than  the  rock-built  embattlements  and  turreted  castles  of  the  for- 
eign and  ancestral  lands  across  the  sea. 

Religion,  reaching  out  in  the  direction  of  equity  and  fraternity, 
unpinioned  by  dogmatism,  leads  our  people  toward  a  common 
brotherhood  for  all  mankind.  Art,  culture,  wealth,  and  inde- 
pendence. What  more  can  be  needed  to  stimulate  patriotic  ac- 
tion? If  these  great  surroundings  and  your  own  ambition  to  be 
worthy  of  citizenship  in  this  age,  surpassing  the  dreams  of  the 
1770 


133 

Magi,  and  tMs  country,  opening  a  new  epoch  for  freedom  and  prog- 
ress, will  not  enable  you  to  brave  the  threats  and  clamorings  of 
the  mercenary  agents  and  venal  influences  of  the  greedy  money 
mongers,  then  surely  anything  I  may  say  will  be  in  vain. 

I  have  indeed  been  hopeful,  yet  in  the  midst  of  misgivings, 
that  the  members  of  this  gi-eat  legislative  assembly  might  prove 
themselves  worthy  of  the  land  and  the  people  and  the  high  order 
of  citizenship  and  responsibility  that  they  represent  in  this  Con- 
gress. 

To  make  it  so  and  bring  justice  and  prosperity  back  to  a  long- 
betrayed  iieople  we  must  withstand  in  this  great  crisis  the  insid- 
ious and  merciless  encroachments  and  legislative  advantages  that 
the  gold  and  bond  conspirators  now  seek  to  fasten  upon  our  be- 
loved country. 

I  pray  you,  gentlemen,  stand  up  erect,  gird  for  the  battle,  and 
move  forward  like  men  worthy  of  the  confidence  and  love  of  man- 
kind. But  if  you  will  not,  still  mankind  is  of  greater  value  and 
power  than  money  and  aU  of  its  treacherous  methods.  Still, 
whether  you  go  with  it  or  no,  shall  humanity  move  forward 
toward  the  dawn  of  a  new  and  better  day.  [Applause.] 
1770 


Denomi nations  of  Currency. 


Keeping  small  denominations  of  our  legal-tender  notes  in  abundant  cir- 
culation ameng  our  people  and  paying  out  silver  in  due  proportion  on  all 
coino  bUgations  when  presented  wiU  stop  the  raids  on  our  Treasury  for  gold. 


SPEECH 

O  F 

HON.  HENHY  A.  COEEEEN, 

OF  WYOMING, 

In  the  House  of  Eepresentatives, 

Friday,  Jannary  25,  1895. 

The  House  being  in  Committee  of  the  Whole  to  consider  House  bill  8518 
making  appropriations  for  sundry  civil  expenses  of  the  Government. 

The  following  amendments  were  offered: 

Mr.  SAYERS.  Now,  Mr.  Chairman,  I  offer  the  amendment 
which  I  send  to  the  Clerk's  desk.  It  is  one  amendment  to  two 
clauses  of  the  section  under  consideration,  I  offer  this  in  order  to 
test  the  sense  of  the  House  upon  the  proposition. 

The  Clerk  read  as  follows: 

On  page  20,  at  the  end  of  line  8,  insert  the  following: 

''Provided,  That  no  portion  of  this  sum  shall  be  expended  for  printing 
United  States  notes  of  a  larger  denomination  than  those  that  may  be  can- 
celed or  retired." 

On  page  20,  at  the  end  of  Une  15,  insert  the  following: 

"  Provided,  That  no  portion  of  this  sum  shall  be  expended  for  printing 
United  States  notes  of  a  larger  denomination  than  those  that  may  be  can- 
celed or  retired." 

During  progress  of  the  debate  the  following  amendment  was 
also  offered: 
Mr.  COOMBS.    I  ask  that  my  amendment  be  read. 
The  Clerk  read  as  follows: 

On  page  20,  after  line  15,  insert  the  following  proviso: 

"Provided,  That  no  part  of  the  appropriation  made  by  this  and  the  preced- 
ing paragraph  shall  be  used  for  printing  gold  certificates,  and  that  so  much 
of  section  12  of  the  act  approved  July  12,  1882,  entitled  'An  act  to  enable 
national  banking  associations  to  extend  their  corporate  existence,  and  for 
other  purpose,'  as  authorizes  and  directs  the  Secretary  of  the  Treasury  to 
receive  deposits  of  gold  coin  with  the  Treasurer  or  assistant  treasurer  of 
1770  134 


135 

the  United  States,  and  to  issue  certificates  thereon,  be.  and  the  same  is  here- 
by, repealed;  and  all  such  certificates,  after  received  into  the  Treasury,  shall 
be  canceled." 

Mr.  COFFEEN  said: 

Mr.  Chairman:  There  are  two  or  three  points  involved  in  this 
amendment  and  this  discussion  that  I  believe  are  not  yet  suffi- 
ciently noticed  and  developed. 

In  reply  to  the  gentleman  from  New  York  [Mr.  Coombs]  ,  who 
has  just  introduced  a  substitute  amendment  providing  that  no  part 
of  this  fund  shall  be  used  for  the  issuance  or  preparation  of  gold 
certificates,  my  conviction  is  that  the  gentleman  is  speaking  un- 
der a  misapprehension.  The  law  already  provides  that  when  the 
gold  reserve  is  less  than  $100,000,000  no  issue  of  gold  certificates 
shall  take  place. 

Mr.  COOMBS.  I  said  that;  but  when  our  gold  reserve  went  up 
to  $110,000,000  or  $115,000,000  then  the  Secretary  had  to  issue  more. 

Mr.  BLAJND.     The  proposition  now  is  not  to  issue  them  at  all? 

Mr.  COFFEEN  of  Wyoming.  As  far  as  that  part  of  the  amend- 
ment is  concerned,  taking  away  from  the  Secretary  all  power  to 
issue  gold  certificates,  I  have  no  objection  to  it,  for  at  all  times  I 
am  in  favor  of  reducing  the  mongrel  and  manifold  system  of  cur- 
rency in  circulation  to  the  simplest  possible  form. 

Mr.  VAN  VOORHIS  of  New  York.  Will  the  gentleman  please 
tell  us  what  is  the  gold  reserve,  where  it  is,  in  what  form  it  is,  and 
how  it  is  to  be  got  at? 

Mr.  COFFEEN  of  Wyoming.  If  the  gentleman  needs  informa- 
tion on  that  point,  I  have  a  document  here  that  will  give  the  gen- 
tleman all  the  information  necessary,  and  I  will  hand  it  to  him 
and  proceed  with  the  other  matters,  as  I  have  only  five  minutes. 

Mr.  VAN  VOORHIS  of  New  York.  Is  there  any  gold  reserve, 
except  as  a  matter  of  bookkeeping? 

Mr.  COFFEEN  of  Wyoming.  Will  the  gentleman  be  kind 
enough  to  look  over  the  report  of  gold  reserve  and  other  matters 
pertaining  to  circulation  in  yesterday's  report  of  the  Secretary  of 
the  Treasury?    I  will  go  on  now  with  my  remarks. 

I  want  to  say  that  it  has  been  clear  to  this  House  for  some  time 
that  there  is  a  general  movement  on  the  part  of  the  associated 
monetary  influences  to  retire  the  legal  tenders  from  circulation, 
and  from  the  reach  of  the  common  people  in  their  retail  trade. 
The  very  bill  that  has  lately  been  defeated,  sent  "glimmering 
down  the  slope "  a  few  days  ago,  had  this  provision  in  the  very 
heart  and  core  of  it,  to  retire  the  gi-eenback  circulation.  One  way 
in  which  that  can  be  accomplished,  since  the  Secretary  of  the 
Treasury  and  those  who  favor  his  policy  have  failed  to  accomplish 
the  passage  of  the  ciirrency  bill,  is  to  have  a  discretionary  power 

1770 


13G 

to  change  the  denominations  of  these  legal-tender  notes  in  circu- 
lation into  what  are  called  "bank  money,"  or  bills  of  large  de- 
nomination. That  will  practically  take  these  notes  out  of  circu- 
lation. 

I  am,  therefore,  in  favor  of  the  amendment  of  the  gentleman 
from  Texas  that  was  first  offered,  providing  against  the  change 
from  the  smaller  to  larger  denominations,  and  am  opposed  to  giv- 
ing the  Secretary  of  the  Treasury  any  discretionary  power  on  this 
matter.  All  the  way  through,  the  Secretaries  of  the  Treasury, 
for  twenty  to  thirty  years,  by  some  influence  or  other,  by  soma 
fatality  that  I  can  not  or,  at  least,  shall  not  take  time  now  to  ex- 
plain, have  been  forever  construing  every  doubtful  clause  and 
every  regulation  possible  against  the  circulation  of  the  greenbacks, 
and  in  favor  of  that  which  best  suits  the  national  banks  of  the 
larger  cities  whose  circulation  comes  in  competition  wnth  the  small 
notes  of  the  greenljack  and  Government  currency. 

Mr.  Chairman,  it  has  been  clear  to  all  who  are  carefully  watch- 
ing the  maneuvers  of  the  banking  interests  on  this  money  (lues- 
tion  that  they  are  doing  all  they  can  to  cancel,  convert  into  in- 
terest-bearing gold  bontls,  or  otherwise  retire  all  of  our  forms  of 
legal-tender  money;  and  failing  to  accomplish  the  destruction, 
they  are  doing  all  they  can  now  to  discredit  our  legal  tenders,  lock 
them  up  in  the  Treasury,  in  bank  vaults,  in  bank  reserves,  and  in 
every  way  possible  to  get  them  out  of  general  circulation. 

The  strong  power  of  these  banking  influences  has  for  many  years 
manifested  itself  in  warping  and  perverting  the  administration  of 
financial  affairs  at  our  Treasury  here  in  Washington. 

This  has  been  the  case  through  several  Administrations  and  is 
the  case  to-day  to  too  great  a  degree. 

Why  should  our  honorable  Secretary  of  the  Treasiiry  at  this 
time  and  under  a  Democratic  Administration  join  in  or  at  least  give 
way  to  the  clamor  of  the  banks  of  Wall  street  against  the  general 
circulation  of  our  legal-tender  greenbacks  and  Treasury  notes? 

I  shall  not  undertake  to  answer  why  it  is  so,  why  our  Treasury 
Department  has  constantly  listened  to  the  seductive  influences  of 
the  monetary  syndicates  for  the  last  twenty -five  years,  and  turned 
a  deaf  ear  to  the  voice  and  pleading  of  the  laboring  and  industrial 
classes  for  a  convenient  and  abundant  retail  currency  for  their 
own  use. 

But  that  our  present  Secretary  is  following,  in  part  at  least,  the 
demands  for  the  retirement  or  impairment  of  the  circulation  of 
legal  tenders  is  sufficiently  evidenced  in  his  efforts  to  secure  the 
passage  of  a  bill  contemplating  the  locking  up  and  retirement  from 
circulation  of  om-  legal-tender  paper  money,  in  his  bill  for  per- 
1770 


137 

mitting  both  State  and  national  banks  to  supply  bank  money  in- 
stead. 

Therefore  I  must  stand  against  the  passage  of  any  law  or  the 
negative  action  by  omission  (as  in  the  case  now  before  us)  of  any 
law  that  would  give  the  Secretary  of  the  Treasury  any  discre- 
tionary power  over  the  denominations  of  otir  greenback  and  Treas- 
ury note  legal  tenders  now  in  circulation.  We  know  sufficiently 
well  how  that  power  will  be  used. 

We  know  that  by  changing  the  small  and  convenient  denomi- 
nations of  these  notes  into  large  and  inconvenient  denominations 
he  can  get  them  largely  out  of  circulation  and  under  the  control 
of  the  banks,  and  accomplish  by  this  flank  movement  what  he  has 
failed  to  accomplish  in  behalf  of  the  money  and  bank  powers  in 
his  currency  bill  for  the  deposit  and  retirement  of  this  same  legal- 
tender  Government  paper.  This  greenback  legal-tender  money  is 
the  favorite  money  of  the  people  to-day,  and  has  been  for  over 
twenty  years. 

It  becomes  the  duty  of  this  House  to  prevent  the  accomplish- 
ment of  the  money  dealers'  designs  against  the  general  circulation 
of  greenbacks  and  treasury  notes. 

Let  us  then  insist  on  carrying  this  amendment  that  compels 
unfriendly  administrative  powers  to  reissue  and  keep  out  the  small 
denominations  suitable  for  the  retail  and  general  trade  of  the 
country. 

Does  any  member  need  be  told  that  the  retirement  of  small  de- 
nominations of  our  legal  tenders  means  to  make  more  room  for 
the  circulation  of  nonlegal  tenders? 

Does  anyone  need  to  be  told  that  it  will  have  the  effect  of  re- 
moving, for  the  benefit  of  banks  that  much  of  the  competition 
between  their  bank-note  circulation  and  legal-tender  notes  of  the 
Government? 

It  is  not  sufficient  reply  to  this  that  silver  certificates  can  be 
issued  in  small  denominations  instead.  Silver  certificates  are  not 
full  legal  tender. 

Besides  this  there  is  nothing  compulsory  on  the  Secretary  of  the 
Treasury  requiring  the  issue  of  a  greater  amoiint  of  small  denomi- 
nations of  silver  certificates  than  are  already  issued. 

WHAT  AMOUNT  OF  SMALL  DENOMINATIONS   IS   REQUIRED? 

The  entire  amount  of  silver  certificates  in  circulation  last  Mon- 
day, January  19,  shown  by  the  Treasury  statement,  was  only  $337,- 
784,277. 

Of  this  we  have  no  very  recent  authoritative  statement  at  hand 
showing  the  different  denominations,  but  it  does  not  vary  greatly 
fi-om  the  condition  given  by  Maurice  L.  Muhleman  in  his  hand- 
1770 


138 

book  on  the  Money  of  the  United  States,  He  was  cashier  of  the 
snbtreasury  at  New  York. 

On  page  51,  in  table  giving  entii'e  stock  of  paper  money  by  de- 
nominations, we  find  that  there  were,  in  1893,  only  $39,000,000  of 
one  and  two  dollar  silver  certificates,  $94,000,000  of  fives,  $107,000,- 
000  of  tens,  $56,000,000  of  twenties,  $35,000,000  of  higher  denomi- 
nations. 

If  the  entire  amonnt  of  silver  certificates  was  in  small  denomi- 
nations it  would  not  make  over  one-third  enough  for  the  needs  of 
the  country.    Muhleman  well  says: 

The  proportion  of  the  entire  stock  of  paper  issue  in  small  denominations 
fluctuated  between  79.5  per  cent  and  66.1  per  cent,  with  an  average  of  73.5  per 
cent. 

This  is  the  average  showing  of  twenty-one  years,  from  1873  to 
1893.  The  total  of  small  denominations  in  paper  money  given  by 
him  in  1893  is  $844,000,000.  He  then  says — and  remember  this  is  a 
most  valuable  witness: 

In  view  of  the  fact  that  even  in  1893,  when  the  proportion  of  small  notes 
appears  to  have  been  nearly  77  per  cent,  the  supply  of  the  smallest  denomina- 
tions was  not  equal  to  the  demand,  it  is  not  an  unreasonable  conclusion  that 
an  average  of  75  per  cent  of  our  paper  issues  might  be  in  denominations  not 
exceeding  $20. 

Now,  since  $844,000,000  in  small  denominations  of  various  kinds 
of  paper  money,  being  about  $13  per  capita,  were  not  sufficient  in 
1893,  as  has  been  shown  and  as  is  generally  known,  how  can  you 
supply  the  needs  for  small  denominations  to-day  by  using  silver 
certificates  when  there  is  only  $327,000,000  of  them  in  circulation? 

This  is  not  half  enough,  if  all  of  them  were  used. 

Then  add  all  of  the  national-bank  notes  now  in  circulation,  and 
suppose  they  were  all  in  small  denominations,  still  the  supply  is 
insufficient  by  $300,000,000. 

This  ■\^dll  require  about  three-fifths  of  all  of  our  legal  tenders  in 
circulation  also;  and  we  must  therefore,  to  protect  the  people  in 
their  right  to  small  denominations,  insist  that  none  of  the  legal 
tenders  shall  be  converted  by  the  Secretary  of  the  Treasury  into 
larger  denominations,  or  into  "bank  money,"  as  the  larger  de- 
nominations are  called. 

The  bankers  are  already  sufficiently  favored  with  "bank 
money  "  denominations  of  United  States  notes  and  Treasury  notes 
to  raid  our  Treasury  and  carry  away  gold  out  of  our  gold  reserves. 
Why  give  them  any  more  advantages?  They  also  tie  up  a  great 
amount  of  the  small  denominations  in  legal  tenders  by  deposit  of 
them  and  taking  out  currency  certificates  instead  in  denomina- 
tions of  $5,000  and  $10,000  only,  and  these  are  very  large  denomi- 
nations; and  further,  let  me  say  that  only  the  $10,000  denominar 
tion  of  these  has  been  recently  issued. 

1770 


139 

In  1893,  to  obtain  supply  of  smaller  denominations  so  impera- 
tively demanded  in  times  of  panic,  the  banks,  as  shown  by  MuMe- 
man's  tables,  page  50,  suddenly  returned  about  $60,000,000  in 
gold  certificates  of  large  denominations,  $55,000,000  of  these  being 
in  denominations  of  $500  and  over,  and  they  returned  also  |18,- 
000,000  in  currency  certificates  to  the  Treasury.  It  was  found 
that  there  was  not  a  sufficient  supply  of  small  denominations  to 
stand  the  test  of  the  great  "object-lesson  panic." 

It  should  be  observed  that  the  law  of  May  31, 1878,  which  re- 
pealed the  law  for  the  cancellation  of  the  greenbacks  and  ordered 
them  reissued  when  this  kind  of  money  came  into  the  Treasury,  also 
made  it  mandatory  on  the  Secretary  to  reissue  same  denomina- 
tions for  all  mutilated  notes.  When  they  are  not  mutilated  they 
should  and  must  be  reissued  as  they  are. 

This  law  is  still  in  force,  and  the  retention  or  preservation  of 
these  United  States  legal-tender  notes  rests  on  this  law  of  May  31, 
1878. 

The  last  clause  of  that  beneficent  law  reads  as  foUows: 

Provided,  That  nothing  herein  shall  prohibit  the  cancellation  and  destruc- 
tion of  mutilated  notes  and  the  issue  of  other  notes  of  like  denominations  in 
their  stead,  as  now  provided  by  law. 

Now,  under  the  comijulsory  laws  as  they  exist  regarding  the 
reissue  of  same  denominations  in  United  States  notes  as  those  that 
come  into  the  Treasury,  and  with  some  discretion  left  with  the 
Secretary  as  to  denominations  in  issuing  and  reissuing  other  kinds 
of  paper  currency,  still  the  amount  of  all  kinds  of  money  now  ex- 
isting in  the  Treasury  and  out  of  it  in  small  denominations  is  not 
so  large  to-day  as  the  needs  of  the  country  require. 

And  we  base  the  needs  of  the  country  for  the  purpose  of  this 
statement  and  comparison  on  the  statement  of  the  cashier  of  the 
subtreasury  at  New  York.  In  1893  by  his  tables,  to  which  we  have 
referred,  there  were  $844,000,000  in  circulation.  This  was  then 
insufficient. 

About  sixty  to  eighty  millions  of  larger  denominations  were 
sent  in  for  exchange  into  small  bills  and  silver.  Silver  even  was 
selling  at  a  good  premium  over  gold  and  all  large  denominations 
in  New  York  for  the  purpose  of  securing  smaller  denominations 
for  cash  payments,  and  yet  the  sum  then  proven  to  be  so  far  in- 
adequate was  greater  than  the  sum  reported  recently  by  the  Treas- 
urer of  the  United  States  as  in  existence  to-day. 

Why  then,  we  ask,  permit  an  insufficient  supply  of  small  denom- 
inations to  be  changed  into  larger  ones  by  the  Secretary  or  any 
other  power? 

The  honorable  Secretary  himself  says  that  then,  in  1893,  small 
currency  was  at  a  premium,  in  his  testimony  before  the  Commit- 
1770 


140 

tee  on  Appropriations,  and  yet  the  report  of  the  Treasurer  shows 
still  less  in  his  last  annual  statement  existing  now. 

THE  CRY  OF  THE  GOLD  BAIDEHS  STILL  HEARD  IN  THE  LAND. 

But  those  who  oppose  the  amendment  and  the  maintenance  of 
these  convenient  retail  denominations  of  our  legal-tender  money 
say  that  they  desire  to  assist  the  Secretary  to  prevent  the  raids  on 
the  gold  reserve,  of  the  Treasury. 

How  anxious  they  are  to  help  the  Secretary  to  protect  the  gold. 

This  has  been  the  cry  during  this  entire  Congress  when  the 
money  power  wanted  to  secure  any  advantages. 

"We  heard  it,  when  the  repeal  bill  was  being  crowded  through, 
on  both  sides  of  this  Chamber. 

We  heard  it  when  the  Carlisle  currency  bill  was  brought  for- 
ward. 

"We  have  heard  it  frequently  as  an  excuse  for  selling  bonds. 

"We  hear  it  now  again. 

Is  there  one  on  this  floor  that  recognizes  any  sincerity  in  that  cry? 

The  way  to  stop  the  holders  of  bur  coin  obligations  from  raid- 
ing our  undefended  Treasury  is  to  pay  out  silver,  as  every  other 
nation  of  any  consequence  on  the  face  of  the  earth  exercises  the 
right  to  do,  except  England,  and  in  that  country  the  same  result 
is  accomplished  by  raising  rates  of  discount. 

Paying  out  silver  in  due  proportions  under  the  option  and  right 
that  Congress  has  always  reserved  to  the  people  in  redemption  of 
coin  obligations  will  stop  these  raids  instantly. 

On  gold  certificates,  to  be  sure,  we  must  pay  out  gold,  but  I 
shall  support  that  portion  of  the  amendment  of  the  gentleman 
from  New  York  [Mr.  Coombs]  that  forbids  further  issue  of  these. 
Our  nation  is  the  only  one  that  has  to  any  great  extent  issued 
gold  obligations  instead  of  coin  obligations.  Before  the  Commit- 
tee on  Appropriations,  in  answering  the  following  questions,  no- 
tice Mr.  Carlisle's  own  testimony  against  other  than  coin  obliga- 
tions: 

Mr.  Coombs.  I  would  like  to  ask  in  this  connection,  do  European  countries 
have  gold  certificates? 

Secretary  Carlisle.  Not  that  I  am  aware  of.  I  do-  not  at  this  moment 
think  of  any  Government  except  the  United  States  which  issues  a  certificate 
based  specifically  upon  any  particular  coin. 

Mr.  Coombs.  Are  we  not  by  the  use  of  these  gold  certificates  furnishing  a 
facility  for  the  obtaining  of  gold  from  the  Treasury— making  it  easier? 

Secretary  Carlisle.  I  have  just  stated,  in  my  opinion  if  the  holders  of 
gold  coin  could  not  put  it  in  the  Treasury  and  use  that  institution  substan- 
tially as  a  warehouse,  taking  out  the  paper  representative  of  it,  the  gold 
itself  would  come  in  and  stay  there.  The  banks  and  other  institutions  do  not 
like  to  hold  gold  coin;  it  does  not  circulate  from  hand  to  hand  among  the 
people,  but  the  gold  certificate  does,  and  that  is  the  most  convenient  form  in 
whicl>they  can  put  their  gold  for  circulation;  we  simply  take  care  of  the  coin 
for  them. 
1770 


141 

And  yet  the  honorable  Secretary  insists  on  paying  out  gold  on 
coin  notes  and  greenbacks  as  well  as  on  gold  certificates.  So,  Mr. 
Chairman,  I  protest  against  the  Secretary  leaving  the  door  of  the 
gold  vaults  open  to  holders  of  greenbacks,  Treasury  notes,  and  all 
other  obligations  in  which  coin  instead  of  gold  is  specified,  and 
then  clairaing  that  he  desires  to  stop  the  raid  on  gold  reserves. 

Outside  gold  contracts  that  we  are  told  exists  to  the  amount  of 
$5,000,000,0000  is  practically  that  much  gold  sold  for  future  de- 
livery. This  condition  is  growing  more  dangerous  and  ought  to 
be  remedied  by  law. 

I  will  here  read  the  Stanley  Matthews  resolution  passed  by  an 
overwhelming  majority  in  both  branches  of  Congress  in  1878. 

Be  it  resolved  by  the  Senate  (the  House  of  Representatives  concurring  therein). 
That  all  the  bonds  of  the  United  States  issued  or  authorized  to  be  issued 
under  the  said  acts  of  Congress  hereinbefore  recited  are  payable,  principal 
and  interest,  at  the  option  of  the  Government  of  the  United  States,  in  silver 
dollars  of  the  coinage  of  the  United  States,  containing  iVZi  grains  each  of 
standard  silver,  and  that  to  restore  to  its  coinage  such  silver  coins  as  a  legal 
tender  in  payment  of  said  bonds,  pi-incipal  and  interest,  is  not  in  violation  of 
the  public  faith  nor  in  derogation  of  the  rights  of  the  public  creditor. 

This  is  the  position  of  our  people  on  the  payment  of  silver  and 
other  money  to  prevent  gold  raids.  John  Sherman  him- 
self while  Secretary  of  the  Treasury  bore  testimony  as  follows,  just 
following  the  howl  of  Wall  street  in  1878  against  silver: 

On  the  other  hand  I  will  give  the  favorable  effects.  In  the  first  place,  the 
silver  bill  satisfied  a  strong  public  demand  for  bimetallic  money,  and  that  de- 
mand is,  no  doubt,  largely  sectional.  No  doubt  there  is  a  difference  of  opin- 
ion between  the  West  and  South  and  the  East  on  this  subject,  but  the  desire 
for  remonetization  of  silver  was  almost  universal.  In  a  Government  like  ours 
it  is  always  good  to  obey  the  popular  current,  and  that  has  been  done,  I  think, 
by  the  passage  of  the  silver  bill.  Resumption  can  be  maintained  more  easily 
upon  a  double  standard  than  upon  a  single  standard.  The  bulky  character 
of  silver  would  prevent  payments  in  it,  while  gold,  being  more  portable,  would 
be  more  freely  demanded,  and  I  think  resumption  can  be  maintained  with  a 
less  amount  of  silver  than  of  gold  alone.    *    *    * 

Senator  Jones.  "Would  the  fact  that  they  (our  bonds  held  in  Europe)  come 
back  enable  us  to  maintain  resumption  much  easier? 

Secretary  Sherman.  Undoubtedly. 

Senator  Bayard.  You  speak  of  resumption  upon  a  bimetallic  basis  being 
easier.  Do  you  make  that  proposition  irrespective  of  the  readjustment  of 
the  relative  values  of  the  two  metals  as  we  have  declared  them? 

Secretary  Sherman.  I  think  so.  Our  mere  right  to  pay  in  silver  would 
deter  a  great  many  people  from  presenting  notes  for  redemption  who  would 
readily  do  so  if  they  could  get  the  lighter  and  more  portable  coin  in  ex- 
change. Besides,  gold  coin  can  be  exported,  while  silver  coin  could  not  be 
exported,  because  its  market  value  is  less  than  its  coin  value. 

Senator  Bayard.  I  understand  that  it  works  practically  very  well.    So  long 

as  the  silver  is  less  in  value  than  the  paper  you  will  have  no  trouble  in  re. 

deeming  your  paper.    When  a  paper  dollar  is  worth  98  cents  nobody  is  going 

to  take  it  to  the  Treasury  and  get  93  cents  in  silver;  but  what  are  you  to  do 

1770 


142 

as  your  silver  coin  is  minted?  By  the  1st  of  July  next  or  the  1st  of  January 
next  you  have  eighteen  or  twenty  millions  of  silver  dollars  which  are  in  cir- 
culation and  payable  for  duties,  and  how  long  do  you  suppose  this  short  sup- 
ply of  silver  and  your  control  of  it  by  your  coinage  will  keep  it  equivalent  to 
gold— when  one  is  worth  10  cents  less  thjin  the  other? 

Secretary  Sherman.  Just  so  long  as  it  can  be  used  for  anything  that  goldis 
used  for.  It  will  be  worth  in  this  country  the  par  of  gold  until  it  becomes  so 
abundant  and  bulky  that  people  will  become  tired  of  carrying  it  about;  but 
in  our  country  that  can  be  avoided  by  depositing  it  for  coin  certificates. 

We,  too,  are  in  favor  of  stopping  the  raid  on  onr  gold  reserves 
and  know  that  the  quickest  and  best  way  to  do  so  is  to  assert  at 
ouce  the  right  and  option  of  the  Government  to  pay  all  coin  obli- 
gations in  silver.  Changing  the  denominations  of  greenbacks  from 
small  to  large  denominations  that  go  at  once  into  the  banks  do 
not  prevent  but  actually  facilitate  the  raid  by  those  banks  on  our 
gold  so  long  as  silver  is  held  back  and  not  applied. 

I  am  disgusted  with  this  sham  cry  and  pretense.     Let  the  law 
be  obeyed  and  the  rights  of  the  people  outside  of  the  monetary 
circles  be  respected  and  the  raids  on  our  gold  will  cease  forever. 
[Applause.] 
1770 


GENERAL  INDEX. 


Page. 
^sop's  fable,  "Fox  without  a  tail" ........ 97 

Aggregate  of  money  determines  prices 4,6,10,14,36 

Alternatives,  no  compromise  with  the  gold  conspiracy ..... 41 

Amount  of  small  bills  required  in  circulation 137 

Amos,  the  prophet,  on  "Elasticity" ..... . 107 

Appeal  to  Congress  to  give  the  people  relief 131,133 

Appreciation  of  money  depreciates  property 8,11,64,65 

Aristotle,  early  teaching  on  money 75,78,86 

Attack  not  on  bankers  but  iipon  systems  of  banking 5,102 

Automatic  theory— the  metals  to  regulate  volume 93,126 

Banks— their  true  province 53,54,85,87,93,101 

Banks  seek  to  control  circulation 5,28,33,39,51,67,94,138,137 

Banks  of  New  York  no  critei'ion  for  the  country. 36,62,117 

Baltimore  and  other  plans  for  currency .. 38,94 

Barring,  Alexander,  quoted _,. . 13 

Beadeau,  as  quoted  by  MacLeod 76 

"  Best "  or  highest  dollars,  and  "plenty  "  of  them,  inconsistent 8,67 

Belgium,  ratio  of  wealth  to  circulation 112 

Bland's  substitute  proposed  for  Carlisle  bill 125,126 

Bonds  of  United  States... 26,44,96 

British  monetary  commissions 53,89 

Butler,  Mr.  Geo.  A.,  bank  president's  testimony 113 

Carlisle-Springer  currency  bill 50,56,64 

Carlisle  bill  is  better  than  present  law 59 

Carlisle,  his  former  teaching,  contrasted  with  present 43,46,140 

Cairnes,  Prof.  J. E.,  of  University  CoUege,  London 99 

Cernuchi,  Henry,  quoted 85 

Challenge  to  Senators  on  quantitative  theory.. 8,9,16,99 

Charles  11  restored  as  "legitimate  tyrant" r--       50 

Cheaper  money  means  better  prices  for  commodities 8,21,65,68,83,112 

Chevalier  endeavored  to  demonetize  gold  in  Europe 113 

China,  money  and  prices 17,21,83 

Cicero  against  CateUne  and  Verres - 108-9 

Circulation  of  money— (See  Aggregate  and  Volume) HI 

Clews's  Financial  Review 50,61 

Coin  redemption  not  necessary  to  maintain  value 13, 14, 15, 42, 80, 87 

Coin  obligations,  all  payable  in  silver  also 26,27,45 

Colange,  Professor  De,  quoted U 

Congestion  of  money  in  New  York  banks— and  Europe 36,37,52,117 

ConvertibiUty  of  paper  money — -  76-79,87,89,127 

Coombs.    Amendment  to  prevent  issue  of  gold  certificates 134, 135, 140 

Cox,  Bickford  &  Co.,  of  Boston,  nature  of  money 117 

Cry  of  the  "gold  raiders"  still  heard  in  the  land 140 

Currency  is  essentially  transferable  debt - 74 

Currency  denominations— for  retail  trade 134,137 

1770  143 


Debt  in  transferable  form  becomes  currency 74 

Definitions  and  the  nature  of  money.    (Sec  Money.) 

Deknar,  Alexander,  gives  valuable  testimony 16 

Demand  for  money  universal,  but  supply  limited 65 

Democracy  and  the  money  question 5,49,52,60,125 

Demonetization  of  silver 20,28 

Demonetization  of  gold,  why  urged  by  Chevalier 013 

Denominations  of  paper  money  should  be  small 134,137 

Deposits  in  banks,  growth  of,  1873-1893 117 

Depositors,  security  of,  endangered 57 

Edmunds,  Senator,  opposing  Stanley  Matthew^'  resolution 24 

Elasticity,  its  meaning  and  dangers 40,46,47,67,90,  91,97,107,127 

Empire  of  wealth,  the  invisible 108 

England,  money  and  prices  in 18,  .>l 

Equity  of  payments  on  time  contracts..-. 1,40. (i"), 69, 101 

European  markets  and  money 7,18,19,20,83,140 

Evils  of  contraction  and  demonetization 20,46,47,70,118 

Executive  interference' in  legislation  to  be  resisted 31,137 

Expansion  of  volume,  to  what  extent 33,34,69,72,110,123 

False  teaching  and  prophecy  of  the  money  power 25,23,30,31,48,67,140 

Faw^ett,  Professor,  quoted 14 

"Fiat  money,"  scare  words 83,93,98 

Fitche,  quoted 10 

France  and  her  finances 23, 4.5,  .54, 96, 105, 112, 114 

Fraud  possible  by  issuing  money  on  bank  assets 56 

Gallatin,  quoted 13 

General  Grant  on  contraction Ill 

Germany,  money  in 54 

Giflfen,  Robert,  of  London,  on  fall  of  prices 119 

Gold  exports 19,25,30,99,104,115 

Gold  standard 12,15,21,42,95,100,123 

Gold  raid  on  our  Treasury 32,26,29,30,140,142 

Gold  redemption 12,13,14,15,26,29,42,122 

Government  legal-tender  paper,  why  issue 34,92,97,98 

Government  legal  tenders,  how  put  in  circulation 35,38 

Graham,  Sir  James,  quoted - 11 

Greenbacks  and  the  banks 28,30,33,45,48,93,96,97,98 

Grey,  Earl,  to  governor  of  Bank  of  England 15 

Hainer,  Hon.  Mr.,  of  Nebraska,  questions  on  per  capita 17,71 

Hamilton,  Alexander,  the  younger 56 

Harrison-Administration  and  the  parity  clause 95 

Hendrix,  Hon.  Mr.,  of  New  York,  on  coin  redemption  in  Prance 45 

Honest  money,  what  is  it 28,67,68 

Homer,  Mr.,  in  bullion  report  of  1810 89,91 

How  to  stop  the  raid  on  the  gold  reserves 23,30,44 

How  the  banks  save  the  country 21,30,46,48,96,140 

Hume,  David,  the  historian,  quoted 10 

Huskisson,  William,  quoted 10 

Importance  of  the  currency  question 6 

India,  silver  and  prices  in 18,20,83,107 

Inflation  and  who  are  the  inflationists 50,51,92,120,124 

International  trade  is  goods  for  goods 19,99 

1770 


14i) 

"  Intrinsic-value  "  money 12,13,14,16.76,79 

Internal  trade  and  commerce  of  United  States  .- 22 

Interocean  and  the  contraction  of  currency Ill 

Investments,  more  profitable  if  more  money  was  issued 59, 73, 112 

Issue  in  controversy  stated _ 3,5,6,41 

Italy,  ratio  of  wealth  to  circulation 112 

Jevons,  Prof.  Stanley,on  money 12,77,80 

Johnson's,  Hon.  Tom  L.  challenge  on  Carlisle  bill 56 

Jones,  Senator  John  P.,  on  gold  and  silver 15,23,114 

Jones,  Senator  John  P.,  on  material  in  money 9,12,78,80,83 

Jones,  Senator  John  P.,  on  parity  clause 27,99 

Jones,  Senator  John  P.,  on  volume  and  price : 8,70,83 

Justinian  Pandects  and  teaching  of  Paulus 9 

Key  that  unlocks  monetary  mysteries 9 

Labor  and  wages  dependent  on  volume 4,16,31,34,35 

Law  of  denominations  in  reissuing  greenbacks 139 

Law,  John,  quoted  by  MacLeod 75,86,88 

Lever,  money  balancing  against  commodities 66, 109 

Locke,  John,  on  money 10 

■  Logan,  Senator  John  A.,  on  contraction Ill 

Losses  to  this  country  by  contraction  policies 21,67,70,71 

Legal  tender,  aU  money  should  be , 34,92,97,98 

MacLeod,  Henry  Dunning 75,78,80,86 

Main  question,  who  shall  control  volume 3,5,41 

Matthews,  Stanley,  resolution  of,  to  pay  silver 23, 24, 141 

Mayer,  Geo.  J.  E.,  on  security  for  depositors 58 

McCuUoch,  Mr.  J.  R.,  quoted 12,48,89 

Mill,  John  Stuart,  on  money 8,10,77,79,100,118 

Mirabeau,  quoted 88 

Money,  its  nature  and  functions 3,4,35,73,74,78,85,93,99 

Money,  dealers  in,  antagonize  production  and  enterprise 66,68 

Money,  table  of  legal,  status  of  United  States  money 130 

Money,  material  in,  is  of  secondary  importance 4,9,11,76,81 

Money,  volume  in  circulation  regulates  prices.. 10,33,68 

Money,mass  of,measured  against  mass  of  wealth 10,16,22,91,105 

Money,  Hon.  Mr.,  of  Mississippi,  questions  on  control  of  prices 7 

Muhleman,  Maurice  L.,  cashier  New  York  subtreasury 104,116,138,139 

National  banks,  Carlisle  on 45-48 

Nicholson,  Prof.  Shield,  of  Cambridge,  quoted 15 

Nicholson,  N.  A.,  of  Oxford,  quoted 15 

Norman,  George  Ward,  quoted —       55 

Option  of  payment  the  right  of  the  debtor 23 

Oriental  countries,  silver  and  prices  in 20 

Overstone,  Lord,  on  money 13,54,89,91 

Our  challenge  on  money  questions ^ 

Panics  and  "object  lessons" 28,47,91,105,108,139 

Paper  money,  if  Government  legal  tender,  is  best 84 

Party  clause  a  trick  and  excuse 23,27,28,30,95,99 

Paulus,  the  Roman,  on  the  origin  and  nature  of  money 9 

Peel,  Sir  Robert  (the  Second) 6,53,91,128 

1770 10 


146 

Per  capita  circulation,  how  to  consider  it 17, 18, 19, 22, 110" 

Perry.  Professor,  of  Williams  College 78,79 

Plans  of  the  bank  power  to  secure  bonds  and  circulation 38,94 

Plumb,  Senator,  on  volume  in  circulation 105 

Prices  affected  by  supply  of  money 5, 8, 12, 16, 18, 20, 22, 26, 31 ,  37, 41 ,  64, 68, 90 

Fainting  machines  of  Government,  turning  out  money  for  whom 121 

Proi)erty  holders  and  producers'  interests  v.  the  banks 16, 17, 66, 68 

Profits  of  present  banking  system 62, 71 

Power  to  issue  notes  and  coin  money  is  governmental 17,41,43,67,82,84 

Quantity  of  money  circulating  controls  prices 6,10,14,16,41,74,118 

Questions  for  money  dealers  to  answer 25,51 

Quorum  of  Coinage  Committee  broken  by  scheming 64 

Raid  on  the  Treasury  gold  reserve 22,26,29,31 

Redemption  in  coin  not  essential  to  value  of  money 12,13,14,15,76,80 

Redemption  of  United  States  notes  should  be  in  silver  coin  also..  23,35,27,116 

Remonetize  silver  and  issue  legal-tender  money 18,22,104 

Repeal  of  silver-purchase  clause  and  its  effect / 28,29,30 

Republican  party  and  the  money  power 49,61 

Retirement  of  greenbacks,  who  demands  it 64,97,98,122,135 

Ricardo  on  nature  and  value  of  money 10,12,13,80,81,88,89 

Sauerbeck's  index  tables  of  average  prices 119 

Sayers  amendment  to  prevent  change  of  denominations 134 

Sherman,  John,  his  work  and  his  words ' 25,26,95,141 

feidgwick.  Professor,  quotations  from 11 

Silver  coinage... 18, 21, 26, 42, 82, 84, 101, 10? 

Silver  in  India 1«,20,83 

Silver  payable  lawfully  on  all  "coin"  obligations 23,25,27,44 

Smith,  Adam,  quoted 7ft 

St.  John.  William  P.,  president  Mercantile  National  Bank,  New  York, 
on  money 4,30,98,102,113,122 

Thornton,  Mr.  Henry,  quoted 7ft 

Three-card-monte  game 95,101,107 

Tooke  on  money 55- 

Treasury  gold  redemption  since  repeal  of  purchase  clause 29,30' 

Treasury  deficit,  what  the  cause 36,38' 

Treasury  Department  has  too  long  served  the  money  power 136 

Torrens - 11 

United  States,  ratio  of  wealth  to  money  in 110 

United  States,  vast  internal  trade  and  production  of 22 

United  States,  bonds  of... 26,44,61,96 

United  States  money,  table  showing  legal  status  of 130 

Van  Voorhis,  Hon.  Mr.,  of  New  York,  wants  information 135 

Volume  in  circulation,  change  of,  and  the  effect 14-30,32,73,90 

Volume,  diminishing,  destroys  prices  and  prosperity 13.17,36,70 

Volume  chitif  element  in  the  control  of  prices 5,10,14,90,102 

Volume,  how  far  should  it  be  expanded 31,69,72,74,110 

"Wages  and  money  volume 5,35,37,114 

Wagnetin,  Mr 91 

Wall  streets  demands  and  conduct 25,33,60,9d 

1770 


147 

Walker,  Francis  A 77 

Warner,  A.  J.,  president  Bimetallic  League 53,88 

Warner,  Hon.  Jolin  De Witt,  of  New  York.    How  put  money  out. 35 

Webster,  Daniel,  quoted  on  banks  and  volume 55, 56, 87, 89, 109 

Wealth  of  different  countries  compared  to  their  circulation 113 

What  is  the  great  issue  between  people  and  the  banks 3,5,41 

Whitmore,  governor  of  Bank  of  England 

Wheat  and  cotton  prices  in  Europe  and  the  East 7,18,30 

Who,  then,  shall  control  the  volume  of  money  issued 3,6,33 

Why,  then,  coin  metals  into  money 101 

Will  the  people  bow  down  or  surrender 40,94 

Williams,  Q-.  G.,  president  Chemical  National  Bank,  New  York 63 

Wood,  Sir  Charles,  quoted 91 

Yardstick  has  nothing  in  common  with  money 4 

Yoked  to  Republican  doctrine 44 

Young,  John  P.,  of  San  Francisco  Chronicle 100 

mo 

o 


THE  ANGLO-AMERICAN  GOLD  BC  )Y. 


And  where  are  our  great  newspapers  and  journals  of  to-day?  where  our  orators  and 
lawyers  and  even  the  clergy  and  all  of  those  who  sell  their  words  and  eloquence  and 
influence  for  hire  ? 

Is  it  strang-e,  that  beholding  the  might  of  intellect  and  power  of  wealth  and  position 
all  arrayed  on  the  side  of  the  gold  combine,  the  people  become  discouraged  and,  at 
times,  confused? 

Is  it  stranjie  that  personal  integrity  and  love  of  country  and  all  moral  qualities 
decline  under  the  withering  blast  of  this  strongly  felt  but  dimly  seen  Empire  of 
Wealth,  which  leaps  in  its  stealthy  movements  over  all  national  boundaries,  over 
mountain  ranges  and  ocean  barriers  to  fasten  its  wealth-sucking  tentacles  on  every 
form  of  production  and  enterprise  ? 

But  on  the  part  of  labor  and  industry  it  is  a  fight  for  life,  and  this  contest  shall  go 
on,  and  on,  and  on  until  either  man  or  money  is  brought  into  complete  subjection  the 
one  to  the  other. 


SPEECH 


OF 


HON.  HENRY  A.  COFFEEN, 


OF   ■W^OHa.lNCBr, 


HOUSE    OF    REPRESENTATIVES, 


WEDNESDAY,  FEBRUARY  6,  1895. 


"WASHINGTON". 
1895. 


SPEECH 

OF 

HON.  HENRY  A.  COFFEEN 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8705)  authorizing  the  Secretary  of 
the  Treasury  to  issue  bonds  to  maintain  the  gold  reserve,  and  to  redeem  and 
retire  United  States  notes,  and  for  other  purposes — 

Mr.  COFFEEN  of  Wyoming  said: 

Mr,  Chairman:  It  would  seem  that  again  we  must  meet  the  in- 
sidious and  persistent  efforts  of  the  money  power  in  the  form  of 
another  bond  and  currency  bill  in  this  present  measure  reported 
from  our  Committee  on  Banking  and  Currency.  Although  in  this 
case  the  bill  professes  mainly  to  be  for  the  issuance  of  bonds,  the 
double  purpose,  as  I  construe  the  bill,  is — 

First.  To  secure  the  issuance  of  more  bonds  that  bankers  may 
invest  the  idle  money  deposited  with  them  in  forms  certain  of 
payment,  exempt  from  taxation  and  good  as  a  basis  of  issuing 
their  own  notes  for  circulation. 

Second.  That  these  bonds  shall  be  made  payable  in  gold  instead 
of  coin,  thus  placing  it  beyond  the  power  of  Congress  and  the  peo- 
ple to  use  the  option  at  all  times  so  far  maintained  in  the  law,  al- 
tliough  not  properly  applied  by  our  various  Secretaries  of  the 
Treasury,  of  paying  in  silver  as  well  as  in  gold. 

Third.  Of  lea\'ing  the  amount  to  be  issued,  the  time  of  issuing, 
and  the  place  of  marketing  these  gold  bonds  entii'ely  with  the  Ex- 
ecutive, who  has  more  than  once,  and  in  more  than  one  Admin- 
istration, shown  a  desii-e  to  inflate  the  bonded  debt  of  the  country, 
even  in  times  of  peace,  while  contracting  the  volume  of  legal- 
tender  money,  and  with  no  reasonable  excuse. 

Fourth.  To  make  these  bonds,  having  such  qualities  as  already 
mentioned,  to  be  50-year  bonds,  so  to  put  out  of  the  reach  of  this 
generation  the  power  to  rectify  the  wrong.  There  is  in  this  an 
effort  to  fasten  a  perpetiaal  debt  upon  our  people  in  the  form  of 
interest-bearing  gold  bonds,  where  there  should  be  a  noninterest- 
bearing  note  of  the  Government  issued  instead,  which  the  people 
would  gladly  absorb  and  use  as  currency  at  home,  and  thus  not 
only  save  interest  to  the  extent  of  many  millions,  but  prevent  for- 
eign investors  from  getting  our  people  under  bondage  (for  that  is 
what  bonds  mean)  to  them. 

Fifth.  The  cry  of  the  bankers  for  the  destruction  of  the  Gov- 
ernment legal  tenders  now  in  circulation  is  also  met  with  a  com- 
plete surrender  to  the  money  power  in  destroying  the  only  legal- 
tender  paper  money  that  the  people  can  under  this  system  possibly 
obtain. 

2  1823 


3 

Sixth.  To  still  further  grant  every  favor  to  the  money  power 
and  take  every  favor  away  from  the  people  it  is  designed  to  re- 
duce the  tax  on  national-bank  issues  from  1  per  cent  per  annum  to 
one-quarter  of  1  per  cent.  This  to  aid  the  banks  in  their  elasticity 
scheme. 

Thus,  first,  with  silver  demonetized;  second,  legal-tender  Treas- 
ury notes  destroyed;  third,  gold  bonds  instead  of  coin  bonds  issued; 
fourth,  bank  notes  to  take  the  place  of  legal  tenders;  fifth,  taxes 
or  interest  on  these  reduced  to  one-fourth  of  1  per  cent;  sixth,  and 
all  of  this  arranged  so  that  the  banks  can  inflate  and  contract  the 
volume  of  curre-ncy  in  circulation  at  their  own  sweet  will.  What 
more  could  Wall  street  demand? 

Is  there  anything  more  that  the  people  can  surrender  to  the 
Anglo- American  gold  conspiracy?  If  so,  either  the  conspirators 
have  not  yet  thought  it  out  or  they  have  not  yet  thought  the  time 
opportune  for  demanding  it. 

THE  PEOPLE  HAVE  BEEN  OFTEN  BETRAYED. 

We  are  in  this  peculiar  situation,  which  is  humiliating  indeed 
to  every  true  Democrat  and  every  lover  of  his  country,  that  in  pre- 
senting our  objections  and  opposition  and  warding  oflE  the  attack 
of  these  organized  and  sjTidicated  vampires  we  find  ourselves 
using  the  same  arguments  and  weapons  that  the  great  demone- 
tizer  of  1873  used  in  his  earlier  and  better  days,  to  wit,  the  Sena- 
tor-Secretary John  Sherman,  before  he  had  become  completely 
servile  to  the  gold  power,  and  again,  this  second  edition  of  the  orig- 
inal demonetizer,  the  present  Senator-Secretary  of  the  Treasury, 
who  also  was  but  a  few  years  ago  found  battling  like  an  Ajax  against 
the  money  power. 

And  last  and  smaller  in  their  generation,  a  lot  of  cuckoo  birdlets, 
not  able  yet  to  soar  and  sing,  but  with  an  ambition  to  serve  in  a 
most  humble  manner  their  masters  of  the  gold  and  bond  conspiracy. 

If  a  patriotic  Jetferson,  or  a  brave  and  fearless  Jackson,  or  any 
other  great  Democrat  with  like  principles  and  love  of  justice,  were 
President  there  would  be  said  to  the  minions  of  the  Anglo- American 
conspiracy  in  all  places,  as  once  was  said  in  England  by  a  great  re- 
former to  a  mercenary  crowd  that  assumed  to  legislate  for  tyranny 
and  all  corriipting  powers  in  the  name  of  the  people: 

Ye  are  a  factious  crew  and  enemies  to  all  good  government.  Ye  are  a  pack 
of  mercenary  wretches,  and  would,  like  Esau,  sell  your  country  for  a  mess 
of  pottage.  Gold  is  your  god.  Is  there  among  you  that  hath  the  least  care 
for  the  good  of  the  commonwealth?  Have  ye  not  defiled  this  place  and 
turned  this  temple  into  a  den  of  thieves?  *  *  *  You  who  were  deputied 
here  by  the  people  to  get  their  grievances  redressed  are  yourselves  become 
their  greatest  grievance. 

In  my  humble  judgment  there  were  no  greater  encroachments 
upon  the  rights  of  the  people  when  those  words  were  uttered  than 
is  now  imminent,  while  the  gold  worshipers  seek  to  destroy  both  '" 
the  silver  and  the  greenback  money  of  the  country  and  deliver  our 
country  over  wholly  to  the  gold  conspiracy. 

But  we  have  neither  a  Jackson  nor  a  Jefferson  nor  a  follower  of 
these  great  patriotic  heroes  in  the  seat  of  executive  power  at  this 
time.  Nor.  to  do  proper  honor  to  a  great  patriot  of  the  early  and 
iincorrupted  days  of  the  Republican  party,  let  me  say,  we  have  no 
brave,  patient,  humanity-loving  Lincoln  at  the  head  of  affairs  to 
stand  as  best  he  could,  and  did,  against  the  money  powers  of  his 
day  that  hovered  like  vultures  over  the  nation  in  its  great  crisis 
and  struggle  with  slavery. 
1823 


It  is  said  of  Lincoln  that  almost  the  only  time  when  he  exhib- 
ited anij:er  at  the  oi)position  so  often  scheminj?  to  embarrass  him 
was  wlien  he  referred  to  the  treachery  and  false  pretenses  and 
mercenary  schemers  from  Wall  street  and  the  gold  and  bond 
markets. 

At  another  time  he  wrote  to  a  friend  in  Illinois  that  letter  full 
of  warning  as  to  the  future  when  he  said  of  the  civil  war: 

Yes:  it  has  been  indeed  a  trying  hour  for  the  Republic;  but  I  see  in  the 
near  future  a  crisis  approaching  that  unnerves  me  and  causes  me  to  tremble 
for  the  siifety  of  my  country.  As  a  result  of  the  war  corporations  have  been 
enthroned  aiid  an  era  of  corruption  in  high  places  will  Idllow.  and  the  money 
power  of  the  country  will  endeavor  to  prolong  its  reign  by  working  upon  the 
prejuditres  of  the  ix;(jple  until  all  wealth  is  aggregated  in  a  few  hands  and  the 
Republic  is  destroyed. 

Wliat  a  contrast  to  the  Presidents  who  have  succeeded  of  late 
years! 

LINCOLN'S  PROPHECIES  WERE  TOO  TRUE. 

Let  me  quote  from  our  present  Secretary  of  the  Treasury  some 
few  of  his  words  when  he  was  battling  so  bravely  against  the  con- 
spirators that  now,  as  it  seems  to  me,  he  willingly  serves.  I  have 
quoted  him  more  at  length  in  a  former  address  to  this  House  when 
I  was  speaking  against  the  former  Carlisle-Springer  currency  T)ill: 

Mankind  will  be  fortunate  indeed  if  the  annyal  production  of  gold  and  sil- 
ver coin  shall  keep  pace  with  the  annual  increase  of  population,  commerce, 
and  industry. 

Mr.  Carlisle  was  then  the  friend  of  silver,  and  saw  that  it  was 
aU  necessary  to  keep  up  the  proper  supply  of  currency.  But  I 
■w-ish  to  use  him  as  a  watness  to  the  conspiracy  of  the  money  power 
that  he  knew  existed  then,  and  we  all  know  that  it  still  is  work- 
ing just  as  certainly  now,  even  though  the  honorable  Secretary 
may  have  gone  into  its  service. 

According  to  my  view  on  the  subject  the  conspiracy  which  seems  to  have 
been  formed  here  and  in  Europe  to  destroy  by  legislation  and  otherwise  from 
three-sevenths  to  one-half  of  the  metallic  money  of  the  world  is  the  most 
gigantic  crime  of  this  or  any  other  age.  The  consummation  of  such  a  scheme 
would  ultimately  entail  more  misery  upon  the  human  race  than  all  the  wars, 
pestilence,  and  famine  that  ever  occurred  in  the  history  of  the  world. 

What  a  strong  and  severe  enemy  to  the  gold  conspirators  was 
Mr.  Carlisle  in  those  days,  and  how  humiliating  it  is  to  us  wha 
still  fight  the  gold  power  to  find  that  he  has  deserted  us! 

Let  not  the  defenders  of  the  honorable  Secretary  and  his  finan- 
cial mea>sures  in  this  House  blame  anyone  to-day  for  using  harsh 
terms  against  the  conspirators  that  are  still  trying  to  get  the 
American  people  in  absolute  serfdom  to  the  money  power.  We 
have  now  far  more  evidence  accumulated  against  the  conspiracy 
than  when  Mr.  Carlisle, in  1878,  was  talking  of  the  "conspiracy" 
"here  and  in  Europe,"  and  declaring  the  "misery  "that  would 
follow  this  "  scheme "  to  be  greater  than  "all  the  wars,  pestilence, 
and  famine  in  the  history  of  the  world." 

FEATURES  OF  THE  PENDING  BILL. 

But  the  present  bill  involves,  as  I  have  said,  the  destruction  of 
our  greenback  currency  to  follow  the  continued  demonetization 
of  silver,  and  at  the  same  time  enlarges  the  power  of  the  national 
banks  on  gold  bonds,  at  one-fourth  their  former  expense  of  taxa- 
tion, to  expand  and  contract  the  currency  at  their  own  option  and 
without  regard  to  the  losses  entailed  upon  the  rest  of  mankind  for 
their  gain.     Let  us  have  Carlisle  in  his  patriotic  days  speak  to  an- 

1823 


swer  Carlisle  in  these  days  of  his  servility.  We  quote  now  from 
his  great  and  masterly  speech  of  March  1,  1881,  against  the  right 
of  national  banks  to  contract  the  currency  or  even  to  exist,  except 
as  aids  in  marketing  bonds,  for  which  purpose  they  were  allowed 
to  base  a  currency  issue  on  deposit  of  bonds. 

Speaking  of  the  power  of  banks  to  contract  the  currency  he 
says: 

It  is  not  going  too  far  to  say  that  until  this  feature  is  wholly  eliminated  or 
materially  modifled  there  can  be  no  assurance  of  safety  to  any  legitimate  in- 
vestment or  business  enterprise  in  this  country. 

He  then  condemns  the  fraud  now  called  "elasticity,"  the  con- 
tracting of  the  money  volume  in  circulation,  as  we  condemn  it 
now.  He  was  right  then,  as  we  are  right  now,  and  he  made  ar- 
guments against  the  dangers  of  contraction  when  left  to  the  banks 
that  neither  he  nor  anyone  else  now  can  answer.  Further  along 
he  arraigns  the  banks  for  contracting  the  circulation — "within 
thirteen  days  they  have  contracted  the  currency  to  the  extent  of 
$18,723,340."    He  exclaims  in  the  same  speech  that— 

When  Secretary  McCulloch,  several  years  since,  in  pursuance  of  his  con- 
traction policy,  began  to  retire  and  cancel  legal-tender  notes  at  the  rate  of 
$4,000,000  per  month,  it  produced  such  consternation  in  business  circles  that 
Congress  was  forced  to  intervene  at  once  and  arrest  the  process  by  the  pas- 
sage of  a  joint  resolution;  but  now  we  have  seen  nearly  $19,000,000  of  circula- 
tion withdrawn  in  less  than  half  a  month,  not  by  the  Government  but  by  in 
stitutions  in  the  management  of  which  the  Gfovernment  has  no  voice,  and  still 
gentlemen  here  insist  that  the  power  under  which  this  has  been  done,  and 
under  which  it  may  at  any  time  be  repeated,  shall  not  be  taken  away.  Why, 
sir,  the  whole  contraction  of  legal-tender  Treasury  notes  under  the  provi- 
sions of  the  resumption  act,  from  January  14, 1875,  to  May  31, 1878,  when  it  was 
prohibited  by  law,  was  only  $34,318,984,  not  twice  as  much  in  more  than  three 
years  as  the  bank  contraction  has  been  in  less  than  two  weeks. 

This  experience  warns  us  that  we  can  not  safely  permit  this  great  power  to 
remain  in  the  hands  of  these  institutions  unchecked  by  legal  restrictions.  It 
is  an  engine  of  destruction  standing  in  the  very  narrowest  part  of  the  way  to 
permanent  industrial  and  commercial  prosperity  in  this  country. 

We  protest,  therefore,  now  and  continuoiisly,  against  any 
further  following  after  the  "schemes  "of  the  "  conspiracy  here 
and  in  Europe."  Let  the  present  Administration,  if  it  can,  find 
proper  and  sufficient  answer  to  the  arguments  made  by  its  own 
present  Secretary. 

But  this  pending  bill  is  against  the  Carlisle  of  former  days  and 
«ven  recently  in  another  respect.  No  other  nation  makes  any  such 
promises  to  pay  in  specific  coin  of  one  metal  (gold)  as  Mr.  Carlisle 
himself  and  the  gold  power  he  now  serves  aim  to  force  this  Con- 
gress to  do.  Although  he  is  speaking  in  regard  to  gold  certifi- 
cates instead  of  gold  bonds,  yet  the  principle  is  the  same  and  the 
statement  concerning  other  nations  is  equally  true  in  regard  to 
payment  on  all  kinds  of  obligations. 

Before  the  Committee  on  Appropriations  in  this  present  session 
of  Congress,  in  answering  the  following  questions,  notice  Mr. 
Carlisle's  own  testimony: 

Mr.  Coombs.  I  would  like  to  ask  in  this  connection,  do  European  countries 
have  gold  certificates? 

Secretary  Carlisle.  Not  that  I  am  aware  of.  I  do  not  at  this  moment 
think  of  any  Government  except  the  United  States  which  issues  a  certificate 
based  specifically  upon  any  particular  coin. 

What,  then,  must  we  think  of  this  remarkable  effort  of  the  hon- 
orable Secretary  to  get  fifty-year  bonds  issued  payable  specifically 
in  gold?  The  conspiracy  of  the  European  gold  power  that  he  once 
so  clearly  pointed  out  is  still  working,  and  he  seems  now  to  fa- 
vor it. 

1833 


THB  GREAT  ORIGINAL.  AMERICAN  DEMONETIZER. 

Let  me  quote  a  few  sentences  from  that  former  and  great  orig- 
inal demonetizer,  the  honorable  Senator  Sherman,  who,  also, 
prior  to  the  specie  resumption  act,  had  many  words  of  warning 
against  the  policies  he  has  since  so  successfully  and  fatally  pressed 
into  legislation,  and  it  may  be  properly  noted  that  he  still  leads 
his  Rex>ublican  party  on  financial  questions,  and  it  would  seem 
leads,  also,  a  few  so-called  Democrats  who  espouse  the  cause  of 
the  money  power. 

Speaking  of  the  progressive  contraction  of  the  currency  then 
going  on.  Senator  John  Sherman,  in  1869,  said: 

The  contraction  of  the  cxirrency  is  a  far  more  distrossinj,'  thint?  than  Sena 
tors  suppose.  Onr  own  iiiid  other  nations  have  gone  through  that  process 
before.  It  is  not  possible  to  take  that  voyage  without  the  si  >rest  distress.  To 
every  person  except  a  ca])itaUst  out  of  "debt,  or  a  .salaried  officer,  or  an  an- 
nuitant, it  is  a  period  of  los<.  danger,  lassitude  of  trade,  fall  of  wages,  suspen- 
sion of  enterprise,  Viankruptcy.  and  disaster.  *  *  *  To  attempt  this  is  to 
imjiose  upon  our  people  by  arresting  tln'iu  in  the  midst  of  their  lawful  busi- 
ness, and  applying  a  new  standai'd  of  value  to  tht;ir  ])roperty,  without  any 
deduction  of  their  del)ts.  or  giving  them  any  opportunity  to  compound  witu 
their  creditors,  or  to  distribute  their  losses,  and  would  be  an  act  of  folly  with- 
out example  of  evil  in  modern  times. 

This  was  said  as  against  contracting  even  the  paper  money  of 
the  country.  Since  this  time  he  has  been  advocating  both  the 
destruction  of  our  legal  tenders  through  the  specie-resumption 
law  and  the  demonetization  of  silver  in  the  law  of  1873,  and  is 
now  the  leading  ' '  financial  weathercock  "  for  the  present  Admin- 
istration. 

The  Democratic  platform  called  for  the  repeal  of  the  Sherman 
Act  of  1890  ''as  a  cowardly  makeshift,  fraught  with  possibilities- 
of  danger  in  the  future." 

But  after  the  election  Mr.  Sherman,  to  save  that  part  of  the 
cunning  makeshift  which  is  the  so-called  "parity  clause,"  an- 
novmced  through  an  interview  a  few  weeks  preceding  the  caU  of  the 
extra  session,  from  his  home  in  Ohio,  to  the  effect  that  the  parity 
clause  must  not  be  repealed,  but  only  the  *'  purchase  clause;"  and 
thus  he  gave  the  cue  by  which  to  save  the  gold  standard  and 
again  demonetize  silver,  and  forthwith  the  President,  carrying- 
out  the  suggestions  of  the  "weathercock  of  finance,"  as  he  has 
been  called,  convened  Congress  in  extra  session  to  combine  Repub- 
licans and  a  sufficiency  of  Democrats  to  repeal  the  purchase 
clause  and  retain  all  the  rest  of  the  "makeshift." 

But  they  of  the  gold  worshipers  tell  us.  Mr.  Chairman,  that  we 
must  pass  this  bill  to  sell  bonds  and  raise  gold  to  keep  up  the 
"parity,"  which  they  use  as  an  excuse  for  suppressing  silver  pay- 
ment. They  thus  keep  the  gold  of  the  Treasury  subject  to  raids- 
of  the  bankers  and  exporters,  who  are  thus  piimping  gold  out  of 
the  Treasury  on  the  gold-redemption  plan  in  place  of  the  coin  re- 
demption which  would  stop  the  raid  if  duly  enforced  almost  in- 
stantly. 

Let  us  hear  John  Sherman  again  as  to  the  right  and  projiriety 
of  paying  silver  on  coin  obligations  as- a  sure  protection  of  the 
Treasury  gold.  He  was  before  a  Senatorial  committee  about  three 
weeks  after  the  passage  of  the  Bland  law  of  1878.  while  he  was 
Secretary  of  the  Treasury.  I  quote  brief  fragments  of  his  testi- 
mony, having  quoted  him  more  fully  in  my  remarks  on  currency 
last  month: 

1823 


JOHN  SHERMAN'S  TESTIMONY  AS  SECRETARY  OF  THE  TREASURY. 

Resumption  can  be  maintained  more  easily  upon  a  double  standard  than 
upon  a  single  standard.  The  bulky  character  c  f  silver  would  prevent  pay- 
ments in  it,  while  gold,  being  more  portable,  would  be  more  freely  demanded, 
and  I  think  resumption  can  be  maintained  with  a  less  amount  of  silver  than 
of  gold  alone. 

Senator  Bayard.  You  are  speaking  of  resumption  upon  the  basis  of  silver, 
or  of  silver  and  gold? 

Secretary  Sherman.  Yes,  sir;  I  think  it  can  be  maintained  better  upon  a 
bimetallic,  or  alternative  standard,  than  upon  a  single  one,  and  with  less  ac- 
cumulation of  gold.  In  this  way  remonetization  of  silver  would  rather  aid 
resumption. 

He  then  shows  how  readily  oiir  bonds  are  absorbed  by  our  own 
people  on  a  bimetallic  basis — payable  in  silver  as  well  as  gold — at 
the  rate  of  a  million  and  a  quarter  per  day  upon  their  returning 
from  Europe.  This  shows  that  there  is  really  no  need  of  selling 
specific  gold  bonds  unless  it  is  simply  to  please  Europe,  and  even 
in  this  respect  as  Sherman  pointed  out  it  is  better  for  our  coun- 
try that  the  bonds  stay  at  home.     He  further  says  for  bimetallism: 

Our  mere  right  to  pay  in  silver  would  deter  a  great  many  people  from  pre- 
senting notes  for  redemption  who  would  readily  do  so  if  they  could  get  the 
lighter  and  more  portable  coin  in  exchange.  Besides,  gold  coin  can  be  ex- 
ported, while  silver  coin  could  not  be  exported,  because  its  market  value  is 
less  than  its  coin  value.    *    *    * 

Senator  Bayard,  of  the  committee,  asked  him: 

How  long  do  you  suppose  this  short  supply  of  silver  and  j^our  control  of  it 
by  your  coinage  will  keep  it  equivalent  to  gold,  when  one  is  worth  10  cents 
less  than  the  other? 

Mr.  Sherman  answers: 

Just  so  long  as  it  can  be  used  for  anything  that  gold  is  used  for.  It  will  be 
worth  in  this  country  the  par  of  gold  until  it  becomes  so  abundant  and  bulky 
that  people  will  become  tired  of  carrying  it  about;  but  in  our  country 
that  can  be  avoided  by  depositing  it  for  coin  certificates. 

BANKS  SHOULD  HAVE  NO  POWER  TO  CONTRACT  VOLUME. 

I  am  opposed  now  and  all  the  time  to  giving  to  the  banks  or  to 
any  private  institution  any  power  whatever  over  the  volume  of 
currency.  Whoever  controls  the  currency  in  its  volume,  whoever 
has  the  power  to  increase  or  decrease  it,  controls  thereby  the  ups 
and  downs  of  prices,  controls  the  prices  of  wheat,  and  cotton,  and 
corn,  and  beef ,  and  all  the  products  of  the  country,  "We  are  con- 
stantly hearing  gentlemen  talk  on  this  floor  as  if  we  were  bound  in 
all  financial  or  monetary  matters  to  legislate  in  the  interest  of  the 
banks.  Sir,  there  are  some  69,000,000  of  people  outside  of  the  banks 
who  have  some  rights  that  ought  to  be  considered  here.  [Ap- 
plause.] 

This  "  elasticity  "  that  we  hear  so  much  about  is  an  utter  fraud 
against  69,000,000  of  the  people  of  this  country.  They  can  not  pro- 
tect their  prices  or  their  opportunities  or  their  business  if  you 
give  into  the  hands  of  the  banks  the  control  of  the  volume  of  the 
currency,  for,  I  repeat,  whoever  controls  the  volume  of  the  cur- 
rency controls  prices,  as  I  demonstrated  in  my  speech  delivered 
here  on  January  8. 

In  my  remarks  on  that  occasion,  adding  my  humble  contribu- 
tion to  the  defeat  of  the  Carlisle  currency  bill,  I  quoted  such  an 
array  of  authorities  who  stand  as  the  great  writers  and  financiers 
of  the  modern  world  that  I  presume  no  one  who  considers  that  galaxy 
of  brilliant  witnesses  vnll  ever  again  question  that  the  chief  est  ele- 
ment in  the  control  of  the  general  range  of  prices  is  the  volume 
of  currency  in  circulation  in  relation  to  the  volume  of  exchanges 
and  payments  dependent  upon  currency. 
1823 


8 

And  further,  we  have  shown  that  the  material  of  which  cur- 
rencj-  is  composed  is  not  an  essential  element  in  relation  to  price, 
lam  aware  that  there  is  one  gentleman,  the  chairman  of  the  Com- 
mittee on  Banking  and  Currency,  who  holds  on  to  the  exploded 
theory  that  prices  of  commodities  or  the  reciprocal  value  of  our 
dollars  is  controlled  by  the  cost  of  production  of  the  precious 
metals.  He  therefore  must  hold,  since  demonetization  of  silver, 
that  the  cost  of  gold  production  regulates  prices  of  products  and 
the  purchasing  power  of  money.  He  may  possibly  draw  his  in- 
spiration and  enlightenment  on  the  money  question  from  that  end 
of  tlie  Avenue  that  never  seemingly  consults  either  the  lessons  of 
history  or  the  needs  of  mankind. 

But  surely  anyone,  even  without  the  help  of  the  great  teachers 
and  writers  I  have  quoted  in  my  former  speech,  on  a  moment's  re- 
flection ought  to  comprehend  that  demonetization  and  remoneti- 
zation  laws  and  laws  for  issuing  paper  dollars  for  general  circula- 
tion, whether  legal  tender  or  not,  have  so  much  to  do  with  increas- 
ing or  decreasing  the  sui)ply,  that  is,  the  abundance  or  scarcity  of 
money  in  circulation,  that  the  mining  of  gold,  or  of  silver  either,  is 
and  can  be  only  incidental  to  the  main  question. 

Money  is  the  creature  of  law  and  not  of  nature  or  of  mines. 
This  has  been  more  or  less  clearly  seen  by  wise  men  for  at  least 
two  thousand  years. 

In  this  discussion  to-day  I  will  only  enumerate  the  names  of 
persons  quoted  and  refer  those  who  wish  the  fuller  quotations  to 
my  former  remarks  as  published.  They  are  such  authorities  as 
John  Stuart  Mill,  Paulus,  the  Roman  jurisconsult;  the  Justinian 
Pandects,  John  Locke,  David  Hume,  Fitche.  Ricardo,  William 
Huskisson,  Sir  James  Grraham,  Torrens,  Professor  De Cola nge.  Pro- 
fessor Sidgewick,  of  Cambridge;  Prof.  Stanley  Jevons,  J.  R.  McCul- 
loch.  Lord  Overstone,  Professor  Fawcett,  N.  A.  Nicholson,  of  Ox- 
ford; Earl  Grey,  Prof.  Shield  Nicholson,  of  Edinburg;  Professor 
Perry,  of  Williams  College;  Alexander  Delmar,  Henry  D.  Mac- 
Leod; and  I  think  of  many  others  who  could  be  cited  to  prove  the 
same  proposition  that  I  have  endeavored  to  enforce  upon  the  at- 
tention of  Congress. 

VOLUME  OF  CURRENCY  CIRCULATING  CONTROLS  PRICES  IN  GENERAL. 

Then  who  should  control  the  volume  of  money  in  circulation, 
all  money,  paper  as  well  as  coin? 

Surely  the  Q-overnment  itself  should  control  the  entire  volume 
designed  for  general  circulation,  and  to  do  this  requires  control  of 
paper  money  as  well  as  coin. 

But,  in  behalf  of  the  bank  and  bond  and  gold  scheme,  there  will 
be  invoked  all  the  sophistries  and  ridicule  and  false  pleas  and  mis- 
leading prophecies  that  can  be  brouglit  forward  against  those  of 
us  who  have  stood  for  sound  and  sensible  teaching  on  the  money 
question  and  the  rights  of  the  laboring  world  to  a  more  equitable 
money,  adequate  in  volume  to  meet  the  needs  of  mankind  and 
maintain  the  general  range  of  prices. 

SOME  PROPHECIES  VERIFIED. 

Ernest  Seyd,  the  great  bullion  expert  of  the  Bank  of  England 
and  a  remarkable  man  in  more  ways  than  one,  said  of  the  gold 
conspiracy  even  two  years  before  it  accomplished  the  demonetiza- 
tion of  silver: 

The  strong  doctrinarism  existing  in  England  as  regards  the  gold  valua- 
tion is  so  blind  that  when  the  time  of  depression  sets  in  there  will  be  this 
1823 


I  9  • 

special  feature:  The  economical  authorities  of  the  country  will  refuse  to 
hsten  to  the  cause  here  foreshadowed  [the  general  decline  of  prosperity  all 
over  the  world  if  the  gold  standard  be  adopted  by  other  nations  of  whicn  he 
had  spoken] ;  every  possible  attempt  will  be  made  to  prove  that  the  decline  of 
commerce  is  due  to  all  sorts  of  causes  and  irreconcilable  matters;  the  work- 
man and  his  strike  will  be  the  first  target;  then  "  speculating  "  and  " over- 
trading" will  have  theii- turn;  many  other  allegations  will  be  made  totally 
irrelevant  to  the  real  issue,  but  satisfactory  to  the  moralizing  tendency  of 
financial  writers. 

Note  the  singular  precision  with  which  the  sophisms  and  false 
teaching  of  the  gold  power  in  these  days  of  commercial  depres- 
sion were  pointed  out  by  such  clear-seeing  men  as  Ernest  Seyd, 
who  at  such  times  spoke  as  an  expert  and  statesman,  although  at 
other  times  as  a  hireling,  notably  when  sent  as  a  hired  attorney  to 
this  country  preceding  the  accomi^lishment  of  silver  demonetiza- 
tion. 

COUNT  WOLOWSKI'S  PROPHECY. 

I  desire  also  to  give  you  the  prophecy  of  Count  Wolowski  in 
1868,  regarding  the  effect  of  the  demonetization  of  silver  should 
it  be  forced  upon  European,  and  American  nations. 

After  pointing  out  the  disasters  that  would  follow,  he  says: 

One  of  the  principal  difficulties  in  this  period  of  general  depression  will  be 
that  the  people  will  look  for  its  causes  in  all  possible  directions.  The  advo- 
cates of  the  gola  standard  will  offer  all  possible  fantastic  and  groundless  ex- 
cuses and  reasons  of  a  secondary  nature  only,  and  the  real  cause — the  demon- 
etization of  silver — will  be  overlooked  until  dire  necessity  shall  force  thinking 
men  to  point  it  out. 

Throughout  the  world  a  decline  in  prices  will  follow,  injurious  alike  to 
owners  of  real  property  and  the  laboring  classes,  and  advantageous  only — 
and  unjustly  so— to  the  owners  of  State  bonds  and  similar  securities. 

Another  prophecy  is  that  of  Thomas  Carlyle,  the  philosopher,  still 
further  back,  given  mainly  from  his  clear  comprehension  of  the 
methods  of  the  plutocratic  forces  to  overcome  the  rights  of  labor. 

THOMAS  CARLYLE'S  PROPHECY. 

More  than  thirty  years  ago  Carlyle  wrote: 

The  Republic  west  of  us  will  have  its  trial  period,  its  darkest  of  all  hours. 
It  is  traveling  the  high  road  to  that  direful  day.  And  this  scourge  will  not 
come  amid  famine's  horrid  stride,  nor  will  it  come  by  ordinary  punitive 
judgments.  It  will  come  as  a  hiatus  in  statecraft,  a  murderous  bungle  in 
policy.  It  will  be  when  health  is  intact,  crops  abundant,  and  the  miiniticont 
hand  open.  Then  so-called  statesmen  will  cry  overproduction,  the  i)t'iii>le 
will  go  to  the  ballot-box  amid  hunger  and  destitution,  but  surrounded  by  the 
glitter  of  self-rule,  and  ratify  by  their  ballots  the  monstrous  falsehood,  over- 
production, uttered  by  miss-statesmen,  and  vindicate  by  the  same  ballot  the 
infamous  lie  overproduction,  thrown  upon  the  breeze  by  servile  editors 
through  a  corrupt  press,  and  thus  bring  ruin  upon  his  country,  serfdom 
upon  himself,  and  oppression  upon  his  children. 

We  who  live  to-day  and  behold  the  mad  rush  of  the  gold  con- 
spirators to  ride  still  on  over  suffering  humanity,  a  humanity 
whose  rights  to  the  fruits  of  their  toil  are  so  gi-ossly  outraged, 
whose  prices  on  products  of  labor  are  so  broken  down,  whose  op- 
portunities to  meet  and  pay  their  creditors  and  taxgatherers  on 
terms  of  equitable  payment  are  so  completely  destroyed,  whose 
values  and  ownerships  are  destroyed  and  wiped  out  by  the  appre- 
ciation of  money,  and  whose  spirit  of  enterprise  and  progress  and 
hope  of  betterment  and  free  homes  for  themselves  and  children 
are  so  crushed  by  the  onward  sweep  of  the  gold  and  bond  and 
bank  conspiracy,  is  it  not  time,  if  we  be  men  and  not  dull  brutes 
or  mercenary  cravens,  that  we  oppose  this  conspiracy?  [Ap- 
plause.] 
1833 


10 

WHERE  DO  YOn  STAND  IN  THE  GREAT  CONFLICT? 

And  where  are  our  great  papers  and  news  journals  to-day, 
where  our  orators  and  lawyers  and  even  the  clergy  and  all  of  those 
who  sell  their  words  and  argmaents  and  eloquence  and  influence 
for  hire?  Is  it  strange  that  beholding  the  might  of  intellect  and 
power  of  X'osition  all  arrayed  on  the  side  of  the  gold  conspiracy 
the  people  become  discouraged?  And  is  it  strange  to  any  thought- 
ful mind  that  morality  and  character  and  love  of  country  shall 
all  decline  under  the  withering  blast  of  this  strongly  felt,  although 
partially  unseen,  empire  of  wealth  that  leaps  over  mountain  ranges 
and  ocean  barriers  to  fasten  its  venal  wealth-sucking  tentacles  on 
every  form  of  production  and  enterprise? 

But  it  is  on  the  part  of  labor  and  enterprise  a  fight  for  exist- 
ence, a  fight  for  life,  an,d  this  contest  will  go  on  and  on  and  on 
until  either  man  or  money  is  brought  into  complete  subjection 
the  one  to  the  other. 

If  mankind  can  not  win  by  the  peaceful  and  deliberate  methods — 
if  corruption  of  the  ballot,  of  legislatures,  of  courts,  and  of  Ad- 
ministrations shall  crystallize  into  a  hard  encrustation,  threaten- 
ing civilization  and  the  rights  of  man  with  destruction,  then  the 
earthquake  will  come,  will  come  whether  you  and  I  will  it  or  not, 
will  come  and  rend  assunder  the  crusts  and  covering  of  injustice 
and  let  in  the  sunlight  of  heaven,  and  the  judgments  higher  than 
those  of  man  -will  be  executed  again  on  the  earth. 

These  judgments  may  come  attended  with  fire  and  sword,  and 
terror  and  blood,  and  suffering  and  death;  but  revolutions  such 
as  this  are  the  great,  deep  impulses  of  God  sweeping  through 
the  hearts  and  consciences  of  mankind,  and  they  are  of  a  purify- 
ing and  cleansing  nature. 

Equity  and  fraternity  are  the  decrees  of  Heaven,  and  must  be 
regarded  among  men  upon  the  earth. 

But  be  not  deceived.  Humanity  is  a  great,  massive,  and  impul- 
sive giant  with  an  instinct  of  preservation  and  a  conscious  appre- 
hension of  justice  that  will  ultimately  turn  on  its  mercenary  and 
tyrannical  oppressors  and  giind  to  the  earth  their  hoarded  prop- 
erties and  vested  wrongs,  often  improperly  called  vested  rights, 
and  all  civilization  will  tremble  at  the  excesses  ofits  retaliation. 

Can  this  possible  culmination  to  a  world-wide  conspiracy  to  rob 
and  enslave  humanity  be  prevented?  Only  by  doing  the  right  thing 
now  and  here,  and  overthrowing  the  conspiracy  of  the  gold  mon- 
gers and  hurling  the  conspirators  and  all  of  their  hireling  forces 
from  places  of  governmental  power. 

In  this  America  must  lead.  America,  the  hope  of  the  world. 
America,  the  chami^ion  of  free  government  and  the  rights  of  man- 
kind. Aiuerica,  the  aegis  of  human  liberty  and  justice!  [Ap- 
plause.] 

The  overthrow  of  the  gold  power  by  America  to-day  would  be 
the  most  glorious  achievement  possible  to  fall  to  the  lot  of  any 
nation,  and  it  can  be  done  if  the  proper  word  is  uttered  by  you  in 
this  great  national  Congress, 

It  is  but  to  reply  and  answer  No,  to  the  gold  power  here  and  else- 
where, and  to  all  of  its  minions  high  and  low,  when  they  come  for- 
ward with  their  aggressions  upon  the  money  of  the  people  and 
the  rights  of  man  to  an  equitable  and  adequate  standard  of  pay- 
ment, an  equitable  currency  of  account  and  exchange  and  good 
1823 


11 

prices,  and  when  they  ask  us  to  place  all  money  for  payment  and 
commerce  out  of  the  reach  of  the  laboring  and  wealth-producing 
people.  It  is  forever  to  say  no.  No,  to  all  of  their  propositions 
until  they  shall  give  back  and  concede  to  tlie  people  of  this  country 
again  their  silver  as  a  standard  money  of  payment  and  the  right 
of  our  sovereign  nation  to  coin,  issue,  and  furnish  a  national  cur- 
rency of  both  legal-tender  paper  and  legal-tender  coin  without 
any  further  interference  from  any  source  whatever. 

And  I  would,  if  I  could,  teach  all  men  in  America  to  treat  as 
an  enemy  to  our  rights,  our  liberty,  and  our  national  sovereignty 
all  who  plot  and  scheme  by  any  measures  whatever  to  deprive 
this  nation  of  the  un trammeled  right  at  all  times  to  coin,  issue, 
and  maintain  its  own  money,  and  maintain  it  in  volume  sufficient 
to  maintain  prices  and  prosperity. 

FURTHER  EVIDENCES  OF  A  CONSPIRACY. 

Mr.  J.  W.  Schuckers,  once  private  secretary  to  Secretarj^  Chase- 
during  the  war.  has  recently  said  in  his  able  letters  to  Henry  Carey 
Baird,  of  Philadelphia: 

I  seek  to  present  the  case,  the  fact,  and  the  proofs  that  the  panic  of  1893  was 
the  result  of  a  deliberately  determined  conspiracy;  that  it  originated  in  "Wall 
street;  that  it  was  organized  in  Wall  street;  that  it  was  engineered  from  Wall 
street,  and  that  in  its  front  stood  a  half  score  lawless  and  reckless  bank  presi- 
dents. 

He  then  follows  this  with  some  rejnarkable  evidence  that  shows 
how  daring  and  reckless  the  gold  power  at  times  has  been;  but  for 
this  I  must  refer  you  to  his  own  recently  published  pamphlet  on 
the  Conspiracy  of  New  York  Bank  Presidents. 

The  conspiring  of  the  national-bank  presidents,  with  the  newly- 
appointed  subtreasurer,  Mr.  Conrad  N.  Jordan,  and  Mr.  Carlisle 
as  the  intermediary  counselors  between  the  White  House  and  the 
Wall  street  financiers,  together  with  their  frequent  secret  meet- 
ings and  conferences  in  April  and  May,  just  before  the  turning 
loose  of  their  object-lesson  panic  of  1893,  are  matters  generally 
known  and  acknowledged. 

But  the  effort  to  get  the  unconditional  repeal  of  the  silver-pur- 
chase clause  through  in  the  closing  months  of  the  Fifty-second 
Congress  have  not  been  so  often  noted. 

This  was  urged  by  Mr.  Cleveland's  friends  upon  the  Republicans 
fearing  and  indeed  discovering  by  the ' '  cute  "  New  York  newspaper 
interview  and  polling  methods  that  the  newly  elected  Democratic 
majority  of  the  incoming  Fifty-third  Congress  could  not  be  relied 
upon  to  do  the  bidding  of  the  gold  mongers. 

First,  Henry  Villard  was  sent  in  January,  1893,  to  confer  with 
Sherman  and  others,  among  them  being  some  so-called  "leading 
Democrats"  (I  would  say  misled  Democrats),  to  see  if  the  anti- 
silver  purposes  of  Wall  street  and  Mr.  Cleveland  could  be  carried 
out  before  the  adjournment  of  that  Congress.  He  failed  in  his 
mission. 

Next,  in  February  Don  M.  Dickinson,  of  Michigan,  came,  as  it 
has  been  said,  "clothed  with  more  extensive  powers  than  Henry 
Villard."  The  Washington  correspondent  of  the  New  York  Her- 
ald, in  a  published  dispatch  of  February  1,  said: 

Don  Manuel  Dickinson  came  to  the  city  last  night  and  has  spent  the  day  in 
consultation  with  Democratic  leaders.  The  reiieal  of  the  silver  hiw  never 
before  received  siich  an  agitation.  *  *  *  The  word  has  gone  out  among 
Democrats  that  this  act  must  be  repealed  at  this  session.  *  *  *  Mr.  Cleve- 
land has  it  in  his  power  to  make  matters  very  uncomfortable  for  certain  sli- 
1823 


12 

ver  Democrats.  The  question  of  the  patronage  will  >)e  an  important  one  af- 
ter March  4.  The  scare  is  pretty  general.  *  *  *  There  is  no  doubt  that 
this  second  exprcssi(jn  of  President-elect  Cleveland  will  V)eiir  fruit.  He  gave 
his  first  iutiiiKitidii  when  Henry  Vilhird  came  to  the  city  and  consulted  with 
Democratic  nioml)ers  of  Congress.     The  seci)n(l  can  not  be  niisundeistood. 

No;  it  was  not  mismiderstood.  but  the  people's  representatives 
among  the  Democrats  stood  their  ground. 

In  the  same  issue  the  New  York  Herakl  in  an  editorial,  speak- 
ing dotibtless  with  full  consent  of  the  machine  and  Wall  street  in- 
terests which  it  always  loyally  supports,  said: 

As  a  party  man,  as  an  upholder  of  the  regular  organization,  as  a  vindicator 
of  the  machine,  Mr.  Cleveland  will  stand  on  firm  ground  when  he  declares 
that  every  aspirant  for  office,  patronage,  favor,  or  any  consideration  will  be 
expected  to  hne  up  for  the  rei)eal  of  the  silver  law. 

The  New  York  Times  spoke  on  the  same  day  in  a  similar  tone, 
but  it  would  seem  that  the  plans  of  the  Republico-Democratic-Wall- 
street  combination  failed  of  accomplishment. 

Then,  after  the  inauguration,  and  after  the  close  and  secret  con- 
ferences of  which  I  have  spoken  between  the  national-bank  presi- 
dents and  agents  and  ollicials  of  the  Executive,  to  which  on 
one  special  occasion,  April  24,  in  the  subtreasmy  office,  the  mem- 
bers of  trust  companies  and  representatives  of  the  great  foreign 
banking  houses  in  Wall  street  were  also  invited.  After  this,  and 
immediately  after  the  conference  of  the  bank  presidents  on  the 
27th  with  the  Secretary  of  the  Treasury,  the  furies  were  uncaged 
and  the  dogs  of  financial  war  against  the  South  and  West  and 
into  all  regions  tributary  to  New  York  as  a  money  center  were 
turned  loose. 

The  great  and  threatened  "object  lesson  of  panic  "  was  sent 
sweeping  over  the  country  to  do  its  deadly  work  of  ruin  and  com- 
mercial disaster  and  bring  the  West  and  South  and  all  antigold- 
power  regions  into  servile  subjection  to  the  schemes  and  dictation 
of  Wall  street  and  the  Anglo-American  gold  conspiracy. 

Mr.  Carlisle's  former  comparisons  of  the  destructive  character 
of  the  gold-standard  conspiracy  with  the  misery  entailed  by  wars, 
pestilence,  and  famine  w^as  proving  to  be  true. 

The  record  of  disaster,  failing  banks,  mercantile  houses,  mills, 
factories,  and  all  the  more  enterprising  purposes  and  industries 
of  the  people  and  the  rapid  transference  of  the  wealth  from  the 
ownership  of  those  who  earned  it  to  those  who  speculate  and 
scheme  for  it  through  financial  legislation  and  manipulation  has 
never  perhaps  been  exceeded  in  this  country  in  so  short  a  time. 
The  highways  were  soon  filled  with  tramping  thousands  and  suf- 
fering spread  rapidly  on  every  hand. 

The  clergymen  and  good  religious  people  who  still  keep  voting 
to  help  enforce  the  gold  standard  and  its  ruinous  effect  on  prices 
and  industry  in  this  country  were  called  upon  in  almost  every 
city,  both  East  and  West,  to  contribute  to  and  organize  and  carry 
into  operation  soup  houses  and  relief  societies. 

John  Sherman's  prophecies  were  also  proving  to  be  true,  as 
well  as  those  of  Mr.  Carlisle  and  others  whom  we  have  already 
quoted. 

But  Wall  street  schemers  were  cold-hearted  and  determined  in 
their  purjjose  to  carrj'  out  their  part  of  the  international,  as  well 
as  the  national ,  movement  to  wipe  silver  legislation  from  the  face 
of  the  commercial  world. 

How  deep  and  extensive  was  this  dark  conspiracy  with  the 
gold  mongers  and  Jewish  syndicates  of  Europe,  or  to  what  ex- 
1823 


13 

tent  the  Executives  of  our  own  nation  for  recent  years  may  have 
been  involved  in  it,  is  a  secret  that  may  never  be  fully  revealed. 

But  on  the  25th  of  June,  1893,  not  by  action  of  the  people  of 
India,  but  by  the  tyrannical  powers  that  govern  India,  the  Indian 
mints  were  also  closed  to  silver,  where  silver  had  been  used  from 
time  immemorial.  This  was  at  once  used  in  this  country  to  work 
a  scare  upon  our  people  just  as  the  panic  in  relation  to  silver  re- 
peal was  being  worked  as  a  scare  in  Europe. 

So  the  President  issued  a  call  on  the  30th  of  June  for  an  extra  ses- 
sion of  Congress  for  the  purpose  of  reaping  the  harvest  of  an  uncon- 
ditional repeal  of  the  last  vestige  of  silver  use  and  the  issue  of  legal- 
tender  Treasury  notes  in  purchase  of  silver.  To  secure  the  issu- 
ance of  gold  bonds  was  another  part  of  the  Wall  street  programme, 
but  although  the  cuckoo  Democrats  aided  the  Sherman-Reed  Re- 
piiblicans  to  carry  the  great  "unconditional,"  yet  the  Democrats 
in  Congress  were  too  solidly  against  giving  the  President  any 
authority  whatever  to  issue  bonds.  And  so  this  part  of  the  Wall 
street  programme  failed. 

Now  another  effort  is  being  made  here  in  this  pending  bill  to 
get  the  bond  issue  authorized  and  the  retirement  of  gi-eenbacks 
provided  for,  that  all  legal-tender  paper  money  may  be  destroyed 
or  taken  out  of  circulation. 

It  must  not  and,  as  far  as  my  vote  and  influence  may  go,  it 
shall  not  be  done. 

Does  anyone  believe,  with  all  the  evidences  of  the  last  few  years, 
and  especially  of  the  last  two  years,  before  him,  that  the  excessive 
raids  on  the  gold  in  the  Treasury  are  for  other  purposes  or  reasons 
than  to  prejudice  the  people  against  the  legal- tender  greenbacks 
and  Treasurv  notes  issued  bythe  Government,  thus  to  fool  the 
people,  destroy  their  legal-tender  money,  and  issue  gold  bonds 
instead? 

Only  one  other  purpose  can  exist— that  of  getting  gold  to  a 
premium  for  their  profit. 

I  must  regard  him  as  to  some  degree  at  least  stupid  or  hypno- 
tized by  a  too  steady  gazing  iipon  the  yellow  metal  who  can  not 
see  through  these  movements  and  the  scheme  of  the  gold  bank 
and  bond  conspiracy  with  which  we  have  been  compelled  to  con- 
tend, not  only  during  this  Congress  but  for  many  years  since  this 
scheme  for  contraction,  demonetization,  and  confiscation  of  the 
wealth  produced  by  the  laboring  world  was  first  made  plainly 
manifest  under  Grant's  Administrations. 

While  the  destructive  forces  for  contracting  circulation  and 
loans  was  being  cruelly  pushed  forward  the  New  York  Tribune 
coolly  said  (May  7,  1893): 

The  effort  of  the  Administration  to  bring  the  West  and  the  South  to  a  full 
realization  of  the  inevitable  consequences  of  compulsory  purchases  of  silver 
bullion — 

The  inexcusable  and  tyrannous  trick  of  bank  contraction,  I 
would  rather  say — 

has  brought  distress  and  perhaps  ruin  to  many  innocent  persons;  but  there 
is  no  reason  to  suppose  that  it  will  be  relaxed. 

The  Tribune's  own  political  party  was  the  main  strength  of  the 
Administration  through  all  this  dark  and  devious  way  of  the  gold 
conspiracy.  After  a  month  of  financial  disaster  the  New  York 
Sun,  on  the  7th  of  June,  in  its  money  article,  said: 

The  presidents  of  the  New  York  banks  think  that  the  so-called  "  object  lea 
son  "has  been  carried  far  enough.    *    *    *    They  see  nothing  to  be  gamed 
by  a  further  shrinkage  in  values  and  unsettling  of  credits. 
1823 


14 

I  commend  this  last  quotation  to  the  pious  consideration  of  the 
chairman  of  the  Committee  on  Banking  and  Currency  [Mr. 
Sprix(JKu].  who  has  brought  in  here  this  pending  bill  and  who  in 
his  late  article  in  the  North  American  Review  tries  so  hard,  yet  so 
vainly,  to  ignore  the  doctrine  and  practice  so  well  comprehended 
in  Wall  street,  as  well  as  all  over  the  civilized  world,  that  values 
are  made  to  shrink  and  gains  to  accrue  at  times  to  the  banks  by 
their  contraction  of  currency  and  credits.  He  tries  vainly  to 
prove  that  cost  of  mining  and  producing  the  precious  metals  is 
the  controlling  element  m  the  value  of  money.  As  we  have  pre- 
viously endeavored  to  show  by  reason,  by  history,  and  by  a  long 
and  unchallenged  array  of  financial  authorities,  the  chiefest  ele- 
ment of  control  and  regulation  in  the  value  of  money  and  the  con- 
sequent general  range  of  prices  on  commodities  is  the  volume  or 
quantity  of  money  in  circulation.  This  is  the  "most  elementary 
proposition  "  of  monetary  science,  says  John  Stuart  Mill. 

On  the  27th  of  June,  1893,  two  days  after  the  demonetization 
decree  of  the  British  Govei'nment  in  India  in  its  cooperative 
movement  with  the  allied  conspirators  in  this  country  and  three 
days  before  the  call  for  the  extra  session,  an  oracle  of  the  gold  and 
bond  speculators  of  New  York,  Henry  Clews's  Financial  Review, 
said,  in  clamoring  for  an  extra  session  of  Congress  to  be  called  by 
the  President: 

There  is  every  reason  why  Congi-ess  should  be  brought  together  at  the  very 
earliest  possible  day.  The  htnises  that  were  engaged  until  lately  in  ship- 
ping gold  became  so  zealous  in  that  enterprise  that  they  tried  to  outstrip 
each  other.  The  result  was  that  more  gold  was  actually  shipped  than  Europe 
required.  The  natural  result  must  appear  in  the  return  of  the  surplus  thus 
exported.  Exchange  has  now  fallen,  indeed,  to  the  specie-imi)orting  point. 
As  soon  as  our  crops  ripen  there  will  be  inevitably  a  return  of  a  good  deal  of 
gold  to  the  country.  One  of  the  arguments  in  favor  of  tlie  repeal  of  the  Sher- 
man law  has  been  that  the  baser  metal  has  driven  the  finer  metal  out  of  the 
country.  In  a  little  while,  with  gold  returning  to  us,  the  strength  of  that 
argument  will  be  sapped.  An  early  session  of  Congi-ess  will  leave  the  argu- 
ment still  in  full  force. 

Yes,  gold  being  shipped  largely  to  Europe  for  the  very  purpose 
of  scaring  silver  advocates  and  advancing  the  schemes  of  the 
money  power  in  Congress  was  stire  to  return  upon  this  country 
by  the  laws  of  legitimate  trade  before  they  could  get  their  legis- 
lation through  unless  they  hurried  the  call  for  the  extra  session. 
Oh.  what  tricks,  what  perfidy,  what  venality,  what  consummate 
selfishness,  what  disregard  of  right  and  justice,  what  cruelty  to 
suffering  and  unsuspecting  humanity! 

Has  their  diabolism  ever  been  excelled?  Did  ever  vultures  tear 
at  the  vitals  of  their  victims  vnth  a  more  cool  and  heartless  cruelty? 

And  so  by  false  and  cunning  statements  and  manipulations  of 
gold  exports  and  redemption  of  greenbacks  in  gold  raids,  and  by 
every  trick  known  to  stockjobbers  and  gamblers,  the  gold  con- 
spirators still  work  to  deceive  the  people  and  still  endeavor  by 
every  known  method  to  capture  votes  in  Congress  to  carry  forward 
their  gold-standard  bond  and  bank  tyrannies.  Yet  I  believe  they 
are  again  doomed  to  defeat. 

This  bill  and  all  of  the  substitutes  are  presented  and  urged  with 
but  little  chance  of  success^  What  I  most  fear  is  a  reorganiza- 
tion of  the  gold  forces  and  money  power  on  new  lines,  in  which 
the  Republicans  will  come  to  the  front  to  "save  the  country,"  as 
they  would  falsely  term  their  movements,  by  combination  herein 
the  House  under  their  present  gold-standard  leaders  and  almost 
solid  gold-standard  ranks,  and  under  the  generalship  of  John 

1823 


15 

Sherman  in  the  Senate,  whose  stratagems  and  peculiar  methods 
have  given  him  great  prestige  as  a  leader  and  won  for  him  and 
his  coworkers  dozens  of  victories  on  hard-fought  financial  battle- 
fields, and  that  thus  the  gold  forces  in  a  Repuhlico  Cleveland- 
Cuckoo  combination  may  yet  secure  the  destruction  of  the  legal 
tenders  y^et  remaining  and  the  forcing  of  the  Grovernment  upon 
a  perpetual  gold-bond  debt  and  bank-issue  policy. 

Last  month  the  Washington  Star  gives  away  to  the  public  some 
of  the  reserved  information  that  hovers  about  us  here  in  Wash- 
ington. On  January  11,  1895,  it  says  concerning  Senator  Sher- 
man's importance  and  ability  in  behalf  of  Wall  street  interests: 

HIS  WORK  ON  THE  SILVER  REPEAL 

This  leads  to  discussion  of  the  part  Mr.  Sherman  tooJs  in  the  repeal  of  the 
bill)  ion-purchasing'  clause  of  the  silver  act  bearing  his  name.  The  assertion 
has  always  been  made  in  Washington  that  it  was  the  advice  of  the  Ohio  Sen- 
ator that  finally  prevailed  in  that  fight.  His  participation  in  the  open  debate 
in  the  Senate  was  conspicuous,  but  his  principal  service,  as  is  claimed,  was 
performed  in  the  conferences  that  were  held.  Many  of  these  were  nonpar- 
tisan, and  Mr.  Sherman  took  part  in  them  upon  the  ground  that  as  the  ques- 
tion was  one  affecting  the  welfare  of  the  whole  country  it  was  his  duty  to 
assist  Mr.  Cleveland  fully  as  much  as  if  the  occupant  of  the  White  House 
were  a  Republican.  That  Mr.  Sherman  was  fully  consulted  during  the  con- 
test both  by  Mr.  Cleveland  and  Secretary  Carlisle  has  long  been  an  open  se- 
cret, and  that  it  was  his  criticism  of  the  compromise  offered  by  the  silver 
men  which  indiiced  the  President  to  reject  it,  and  thereby  force  uncondi- 
tional repeal  in  the  end,  is  openly  asserted  and  believed  by  many  of  the  best 
inforuied  men  in  political  life.    *    *    * 

It  can  be  stated  that  many  Democrats  would  value  his  assistance  very 
e;reatly,  and  would  not  for  a  moment  doubt  its  unselfishness  because  ren- 
dered by  a  Republican  leader  to  an  embarrassed  Democratic  Administration. 
But  some  of  the  Southern  men , who  have  grown  up  in  opposition  to  every  prom- 
inent stand  Mr.  Sherman  has  ever  taken,  would  prefer  to  see  the  Sherman 
leadership,  if  essential  to  solve  the  problem,  exercised  in  circumstances  of  Re- 
publican control  and  responsibility.  These  men,  therefore,  do  not  look  with 
disapproval  on  the  proposition  for  an  extra  session,  but  rather  hold  that,  all 
things  considered,  such  a  step  would  be  both  logical  and  effective.  They  do 
not  hesitate  to  admit  that  the  President  and  Mr.  Sherman  are  in  much  closer 
accord  on  the  money  question  than  the  President  and  the  Southern  leaders 
are,  and  nence  if  it  is  the  Sherman  view  that,  in  any  part,  is  to  prevail,  they 
think  it  would  be  franker  and  better  to  await  the  day,  which  need  not  be  dis- 
tant, wUen  the  Ohio  Senator,  in  the  full  panoply  of  party  leaaer.ship,  would 
be  able  to  take  the  field  and  carry  out  in  person  his  own  plan  of  action.  It  is 
admitted  at  the  same  time,  however,  that  the  situation  is  becoming  so  grave 
a  delay  of  only  three  months  might  be  attended  with  the  most  alarming  con- 
sequences to  the  business  of  the  whole  country.  The  suggestion  is  made  that 
the  panic  of  1893  developed  in  less  time,  and  got  entirely  beyond  the  control 
of  Congress. 

"  It  was  his  (Sherman's)  duty  to  assist  Mr.  Cleveland,"  says  this 
editor  and  supporter  of  the  gold  scheme,  "  fully  as  much  as  if  the 
occupant  of  the  White  House  were  a  Republican,"  and  "that  Mr. 
Sherman  was  fully  consulted  during  the  contest  both  by  Mr. 
Cleveland  and  Secretary  Carlisle  has  long  been  an  open  secret." 
Yes,  the  leader  of  the  Republican  forces  on  all  financial  ques- 
tions, the  silver  demonetizer  and  contractionist  and  the  ever-per- 
sistent enemy  of  the  people's  interests  in  their  efforts  to  withstand 
the  conspiracies  of  the  money  power,  is  taken  into  close  and  secret 
and  frequent  consiiltation  by  this  that  should  be  a  Democratic 
Administration— this  is  what  has  so  thoroughly  disgusted  nearly 
all  true  Democrats  in  Congress  and  has  cost  the  party  such  exten- 
sive defeat  at  the  late  elections. 

"  The  people  want  relief ,"  is  a  frequent  cry;   but  not  such  re- 
lief as  the  Wall  street-JoHN  Sherman  combinations  would  give 
them.     Sherman  is,  and  has  been  since  1873,  the  careful  and  vigi- 
lant guardian  of  European  bond  holders  and  goldholders'  interests. 
1823 


IG 

Mr.  Gordon  Clark,  once  editor  of  the  North  American  Review, 
author  of  a  most  excellent  recent  book  called  "Shylock,"  exposing 
the  conspiracy  of  the  Anglu- American  gold  conspiracy  and  the 
part  that  John  Sherman  has  played  in  their  movements,  has  well 
said: 

The  American  people  must  learn  the  lesson  of  money  or  they  are  lost. 
*  *  *  Shall  England  impose  lipr  plan  of  white  slavery  upon  the  people  of  the 
United  Stateri?  War  with  England— and  not  a  financial  war,  but  a  conflict 
of  powder  and  dynamite— would  be  more  merciful,  better,  and  cheaper  in 
the  end  than  to  permit  the  permanent  infliction  upon  us  of  her  present  money 
conspiracy. 

The  conspiracy  producing  the  panic  of  189.i  used  their  "  scare  " 
circulars  to  make  it  clearly  understood  tliat  their  demands  for  the 
silver-purchase  repeal  bill  must  ba  complieil  with.  In  one  they 
said,  as  has  been  quoted  on  this  floar  heretofore — 

The  interests  of  national  bankers  require  immediate  financial  legislation 
by  Congress.  Silver,  silver  certificates,  and  Treasury  notes  must  be  retired 
and  the  national-bank  notes  nx)on  a  gold  basis  made  the  only  money.  This 
will  reciuire  the  authorization  of  from  S50l),0<NJ,(XJ0  to  $l,(K»il,(KK),(H)()  of  new 
bonds  as  a  basis  of  circulation.  You  will  at  once  retire  one-third  of  your 
circulation  and  call  in  one-half  of  your  loans.  Be  careful  to  make  a  money 
stringency  felt  among  your  patrons,  especially  among  influential  business 
men. 

In  another,  dated  August  19,  18i):?,  at  the  rooms  of  the  Ameri- 
can Bankers'  Association,  No.  3  Wall  street,  they  used  these  sug- 
gestive words: 

*  *  *  The  President  of  the  United  States  having  conven-^d  Congress  in 
extra  session  and  recommended  to  it  such  repeal,  the  power  of  public  opinion 
should  be  brought  to  bear  upon  Congress  to  iaduce  favora))le  action  thereon. 

The  next  day,  speaking  of  the  bankers'  panic,  the  Chicago  Inter 
Ocean,  a  Republican  paper,  said: 

Wlien  the  future  historian  tells  the  world  of  the  great  financial  panic  of 
1893  he  will  say:  "In  the  winter  and  .spring  months  of  that  year  the  New 
York  bankers  and  financiers  sowed  the  wind  and  during  the  summer  months 
reaped  the  whirlwind."  We  know  no  arrangement  of  words  that  can  more 
gi-aphically  describe  the  action  of  New  Yorii  financiers  and  the  results  of 
that  action.  *  *  *  Nor  are  the  New  York  liankers  alone  to  blame.  Those 
of  Boston  and  Philadelphia  come  in  for  their  share.  They  were  only  excelled 
by  the  New  Yorkers  because  of  the  greater  importance  and  opportunity  of 
the  latter.    *    *    * 

Early  in  the  winter  a  bank  president,  conversing  with  a  Chicago  man  of 
business,  said  to  him:  "  Mr.  Jones,  we  are  going  to  make  the  West  pay  up  this 
summer."  "  But  why  should  you  press  your  Western  debtors  this  summer?" 
asked  Mr.  Jones.  The  reply  was:  "  Well,  we  think  it  would  make  you  a  lit- 
tle more  thoughtful  abomt  currency  matters,  and  drive  you  from  your  foolish 
ideas  about  silver." 

But  the  conspiracy  is  still  alive  and  full  of  selfish  energy  and 
greedy  complexity.  What  it  may  yet  accomplish  no  one  can 
foresee;  but  that  in  the  interest  of  humanity  and  good  govern- 
ment and  safety  to  the  Repiiblic  it  ought  to  be  crushed  and  de- 
feated at  every  turn  every  Congressman  can  see  that  is  not  in 
some  way  bound  to  its  support. 

Their  cry  just  now  is,  "Bonds  to  save  the  credit  and  keep  up 
the  gold  reserve, "  and ' '  Destruction  to  the  greenback. "  And  why? 
Because  they,  the  very  fellows  who  keep  up  this  clamor,  can 
use  it  to  raid  the  Treasury  of  its  gold  reserve.  How  totally  false 
their  pretense! 

They  should  not  have  bonds.    No  kind  of  bond  should  be  issued. 

The  greenbacks  should  be  preserved;  they  are  the  best  money. 

All  coin  obligations  should  be  paid  in  coin,  both  silver  and  gold. 

The  raids  of  these  mercenaries  would  stop  if  met  vnth  silver. 

The  monopoly  of  gold  is  broken  if  silver  is  put  forward. 
1823 


17 

Gold,  $500,000,000  of  it,  at  a  premitim  of  20  per  cent,  is  not  one- 
hundredth  part  so  bad  for  the  people  as  prices  and  valuations  of 
$60,000,000,000  of  property  and  products  at  a  discount  of  20  to  30 
per  cent  forced  upon  all  by  the  tyrannous  appreciation  of  gold. 

Debts,  both  public  and  private,  can  be  easily  paid  and  pros- 
perity and  equity  secured  by  breaking  this  artificial  and  legisla- 
tive monopoly  of  gold. 

And  who  knows  how  soon  gold  may  be  forced  to  a  premium  by 
the  bank  syndicate  itself  for  the  temporary  advantage  that  it 
would  give  those  who  are  withdrawing  and  hoarding  gold  now? 

Do  not  be  alarmed;  let  the  shylocks  have  their  way  for  a  little 
time  and  overthrow,  by  their  own  folly  and  greed,  the  monopoly 
of  gold  rather  than  give  them  the  bonds  demanded  and  destroy 
$500,000,000  of  legal-tender  Government  money. 

Gold  at  a  premium  under  such  circumstances  may  prove  a 
blessing  rather  than  a  curse  to  the  people  who  need  a  cheaper  and 
more  equitable  money,  and  the  consequent  rise  in  prices  that  will 
enable  them  to  pay  debts  more  equitably,  rather  than  a  longer 
domination  of  the  now  too  high  and  dishonestly  appreciated  gold 
standard  dollar. 

So,  I  would  say  to  the  consi^irators,  come  on  with  your  threat- 
ened gold  premium;  your  momentary  triumph  will  be  turned  into 
a  defeat  and  a  break  down  of  your  infamous  scheme  to  enslave  our 
people. 

The  New  York  World  very  recently  has  raised  a  very  pertinent 
question  for  the  Wall-street  bankers  to  answer,  and  so  far  no  proper 
reply  is  offered.     The  World  says,  editorially: 

The  banks  have  no  apparent  use  for  gold. 

They  have  absolutely  no  obligations  of  any  kind,  near  or  remote,  which  are 
payable  in  gold. 

Nevertheless  these  banks  are  hoarding  gold  in  large  quantities  at  a  time  when 
to  do  so  is  to  subject  the  Government  to  heavy  and  needless  expense.    *    *    * 

Thus  the  clearing-house  banks  of  New  York  alone  hold  over  $81,000,000  in 
gold  for  which  they  have  no  use. 

I  would  like  to  suggest  here  that  they  have  drawn  most  of  this 
by  gold  raids  upon  our  Treasury  with  that  "  terrible  "  greenback 
which  they  keep  in  hand  as  far  as  they  can  for  this  purpose. 
They  will  buy  gold  bonds  with  their  gold  if  they  can  make  such 
terms  as  they  demand  with  the  Government,  weU  knowing  that 
as  long  as  the  parity  clause  is  construed  for  gold  and  against  sil- 
ver payment  on  all  coin  obligations  they  c&n  raid  the  Treasury 
and  take  it  all  out  again  in  two  months'  time,  as  the  Administra- 
tion persists  in  permitting  them  to  do,  and  as  they  did  do  follow- 
ing the  last  bond  sale.  Or  if  the  Executive  should  use  the  option 
legally  and  rightfully  belonging  to  the  people,  and  pay  these  coin 
notes  when  presented  largely  in  silver,  then  if  they  cared  to  do  so 
they  coiild  force  gold  to  a  premium  and  spread  alarm  over  the 
country,  which,  however,  as  I  have  said,  can  do  no  permanent 
harm  to  the  too  heavily  burdened  debtors  and  industries  who  need 
the  opportunity  that  the  overthrow  of  gold  pajTiient  would  give. 
But  the  World  goes  on  to  say  of  their  gold  hoardings: 

If  they  should  turn  it  into  the  Treasury  and  take  greenbacks  instead  they 
would  be  in  every  respect  as  well  equipped  as  now  to  meet  tlieir  ol>ligations, 
while  the  Government  would  not  have  to  issue  another  $100,000,000  of  bonds 
which  It  will  cost  the  country  $320,(XK),IKX)  to  pay,  principal  and  inter- 
est.   *    *    * 

Are  they  seriously  expecting  gold  to  go  to  a  premium? 

Or  are  they  and  the  banks  all  over  the  country  in  a  tacit  "  combme "  to 
compel  repeated  bond  issues  for  theii-  speculative  profit?    These  banks  ought 
to  answer  these  questions. 
1823 


18 

On  the  foUowiBg  day  the  World  editorially  says  again: 

Their  replies  are  evasive,  shifty,  insincere. 

They  have  no  obligations  payable  in  gold.    *    *    * 

There  is  no  possible  reason  for  them  to  hoard  gold,  except  that  they  expect 
a  premium  upon  it,  or  that  they  wish  to  force  the  Government  to  borrow 
money  which  it  does  not  need. 

The  New  York  Times  of  January  26,  with  less  loyalty  to  the 
people  and  far  more  loyalty  to  the  money  power,  urges  them  to 
use  means  of  coercion,  which  it  would  seem  has  frequently  been 
done  before,  to  drive  Congi-ess  to  do  their  bidding.     It  says: 

*  *  *  But  we  close,  as  we  began,  with  the  unqualified  statement  that 
Congress  will  not  do  this — 

That  is.  authorize  the  Secretary  to  borrow  on  gold  bonds — 

that  it  will  not  do  anything,  unless  it  be  forced  to  action  by  the  over- 
whelming pressure  of  publi(;  opinion.  It  is  sheer  folly  to  rely  on  anything 
else.  This  force  organized,  directed,  and  concentrated  upon  Congress,  as  it 
was  in  the  spring  of  1891.  when  the  free-coinage  bill  was  killed,  as  it  was  in 
1893,  when  the  repeal  bUl  was  enacted,  will  do  the  work.    Nothing  else  will. 

The  country  quite  well  understands  what  their  methods  were 
in  1891  and  1893.  We  all  should  know  by  this  time  that  they 
never  move  in  a  straightforward  course,  but  always  by  feint  and 
stratagem  to  gain  their  \ictories. 

But  I  have  already  detained  the  House  long  enough  on  these 
questions.  The  steps  of  the  gold  conspiracy  in  the  past  are  an  in- 
dication to  us  of  what  their  steps  and  purposes  v/ill  be  in  the  fu- 
ture. 

The  relief  necessary  and  for  which  the  laboring  people  are 
anxiously  waiting  is  to  see  Congress,  the  loyal  and  truly  Demo- 
cratic part  of  Congress,  again  roll  back  the  tide  of  selfishness  and 
the  organized  gi'eed  of  the  gold  and  bond  combine  and,  at  the 
earliest  possible  moment,  if  opportunity  should  offer,  to  crush  the 
gold  conspiracy  forever  and  set  America  free  again  from  the 
severely  threatened  stibjugation  that  England  and  her  Tory  allies 
in  Wall  street  would  fasten  iipon  our  country. 

But  I  am  persuaded  that  it  is  not  so  much  simple  intelligence 
needed  now  to  see  what  is  wi-ong  and  what  are  the  motives  of  the 
gigantic  forces  with  which  we  must  contend,  and  how  the  gold 
raid  must  and  can  be  stopped  by  obej^ing  the  present  law  and  en- 
forcing the  option  of  coin,  including  silver  i)ayment,  which  our 
present  Secretary  of  the  Treasury  as  well  as  those  preceding  him 
have  been  constantly  violating,  and  how  an  adequate  legal-tender 
system  of  money  of  both  coin  and  paper  will  revive  prices,  revive 
profits,  revive  hope  and  prosperity — all  of  these  things  every  true 
and  honest  Representative  can  see — but  more  courage,  more  heart, 
more  sjonpathy  for  struggling  hmnanity ,  more  patriotism  is  needed. 

The  eloquent  Archbishop  Ireland  has  well  said: 

Patriotism  is  love  of  country  and  loyalty  to  its  life  and  weal— love  tender 
and  strong,  tender  as  the  love  of  a  son  for  the  mother,  strong  as  the  pillars  of 
death;  loyalty,  generous  and  disinterested,  shrinking  from  no  sacrifice,  seek- 
ing ao  reward  save  country's  honor  and  country's  triumph. 

And  I  shall  close  with  a  warning  and  a  challenge  to  the  money 
power  that  if  it  shall  not  curb  its  selfishness  and  greed  and  realize 
that  its  votaries  are  but  part  of  the  great  struggling  mass  of  hu- 
manity, whose  rigdits  to  lite,  liberty,  and  a  fair  opportunity  in  this 
country  are  as  well  founded  as  that  of  any  of  the  minions  of  the 
gold  power,  then  the  people  must  rise  up,  and,  if  need  be,  crush 
their  enemies  by  whatever  means  are  lawful  in  defense  of  the  life 
and  liberty  of  this  country  and  its  people. 
1823 

O 


The  Currency. 


Nothing  but  evil  springs  from  this  imaginary  money  wherever  it  is  tried.— 
James  Madison. 


SPEECH 

OF 

RON.    GEOEGE    W.   COOPEH, 

OV    INDIANA, 

In  the  House  of  Representatives, 

Wednesday,  February  6,  1895.      » 

The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8705)  authorizing  the  Secretary  of 
the  Treasury  to  issue  bonds  to  maintain  the  gold  reserve,  and  to  redeem  and 
retire  United  States  notes,  and  for  other  purposes — 

Mr.  COOPER  of  Indiana  said: 

Mr.  Chairman:  I  listened  with  mnch  interest  to  the  remarks  of 
the  very  able  and  distinguished  gentleman  from  Maine  [Mr.  Reed] 
yesterday  upon  the  pending  question.  He  began  by  calling  our 
attention  to  the  fact  that  under  our  present  financial  system  there 
had  devolved  upon  the  Treasury  Department,  in  addition  to  its 
ordinary  administrative  duties,  the  business  of  banking;  that  the 
United  States,  having  issued  its  notes  and  announced  its  readi- 
ness to  redeem  those  notes  at  the  pleasure  of  the  holders,  was 
under  the  necessity  of  keeping  a  reserve  constantly  on  hand  for 
that  purpose,  and  to  respond  to  every  demand  upon  that  fund. 

He  says  that  the  "business  establishment"  of  the  Treasury  has 
been  running  astern,  and  that  instead  of  borrowing  money  on  its 
own  account  it  has  taken  the  money  of  the  banking  department 
and  reissued  it:  that  the  result  is  what  is  known  in  popular  i)hrase 
as  the  "endless  chain,"  and  that  by  this  j^rocess  the  United  States 
is  made  purveyor  of  gold  to  the  rest  of  the  world. 

So  far,  Mr.  Chairman,  there  is  no  reason  to  complain  of  this 
statement  of  the  case.  That  such  process  is  and  has  been  going 
on  no  one  will  dispute.  But  when  the  gentleman  tells  us  that  this 
condition  is  not  the  legitimate  and  unavoidable  operation  of  our  sys- 
tem of  finance  as  affected  by  existing  conditions  I  must  beg  leave 
to  dissent.  The  gentleman  knows  perfectly  well  that  the  Secre- 
tary has  no  power  or  authority  under  existing  law  to  borrow 
money  with  which  to  meet  current  deficiencies;  he  knows  that 
under  the  act  of  May  31, 1878,  the  Secretary  is  obliged  to  take  from 
what  he  calls  the  banking  department,  the  redeemed  Treasury 
notes,  and  reissue  them.  That  law  is  mandatory;  there  is  no  dis- 
cretion. 

Mr.  Chairman,  I  am  unable  to  understand  the  gentleman  when 
1S28  1 


'2 

he  tells  us  that  this  condition  of  things  never  need  to  have  occurred 
under  existing  law,  or  that  it  is  not  the  logical  and  necessary  re 
suit  from  our  present  system  of  finance. 

He  has  offered  a  substitute,  and  perhaps  we  may  be  able  to  see 
his  real  position  in  this  propused  measxire.  This  substitute  con- 
sists of  two  sections  and,  omitting  matters  of  detail,  they  embody 
each  a  separate  proposition.  The  first  section  confers  authority  to 
issue  bonds  to  support  the  operations  of  the  banking  department 
of  the  Treasury,  and  the  second  to  meet  the  engagements  of  its 
business  department. 

But  what  disposition  does  this  substitute  make  of  the  Treasury 
notes?  Where,  in  either  or  Ijoth  of  these  sections  taken  together,  is 
the  remedj-  for  the  operaticm  of  the  "endless  chain?" 

With  all  due  respect  to  the  gentleman,  it  seems  to  me  that  he  is 
just  a  trifle  shy  on  that  (iiiestion.  Now,  this  substitute  will  cer- 
tainly enable  the  Secretary  to  replenish  his  gold  reserve,  if  need  be, 
over  and  over  again;  but  how  are  we  to  escape,  what  we  all  de- 
plore, the  unprofitable  task  of  furnishing  gold  to  all  the  world? 

There  is  absokitely  nothing  in  his  bill  to  provide  against  that 
contingency. 

I  Iviiow.  Mr.  Chairman,  that  the  gentleman  tells  us  that  the 
Secretary  should  not  pay  out  the  gi-eenbacks,  but  should  borrow 
money  to  meet  current  deficiencies:  but  this  is  equivalent  to  a 
repeal  of  the  law  of  1878.  The  gentleman  can  not  repeal  tliat  law 
by  his  argument:  why  does  he  not  write  it  in  his  substitute. 
Let  us  now,  therefore,  see  where  the  gentleman  stands,  construing 
his  substitute  and  his  s])eech  together. 

First,  he  would  autliorize  bonds  with  which  to  buy  gold  with 
which  to  redeem  Treasury  notes, 

Second,  he  would  authorize  bonds  to  meet  Treasury  deficiencies, 
so  that  the  Treasury  notes  should  remain  untouched,  their  fate 
awaiting  some  future  determination. 

Third,  he  would  not  repeal  but  leave  in  force  the  law  of  May 
31,  1878,  which  reads  as  follows: 

And  when  anv  of  said  notes  may  be  redeemed  under  any  law.  from  any 
source  whatever,  and  shall  belong  to  the  United  States,  they  shall  not  lie  re- 
tired, canceled,  or  destroyed,  but  they  shall  be  reissued,  paid  out  again,  and 
kept  in  circulation. 

Here  are  the  gentleman's  words: 

Our  situation  is  this:  "We  were  redeeming  greenbacks  when  they  were  pre- 
sented. If  the  revenue  was  equal  to  tin;  expenditures  whenever  a  grceiilinck 
was  redeemed  it  would  stay  in  the  Treasury,  and  this  notwithstandiiii,' the 
fact  the  Secretary  is  authorized  to  reissue:  lor  it  is  not  either  the  authoriza- 
tion or  even  the  demand  of  the  law  that  t  hey  shall  be  reissued  that  causes  the 
trouble.  It  is  the  fact  that  they  arc  reissued.  It  is  the  fact  that  their  reissu- 
ance causes  this  continued  depletion  "f  the  Treasury. 

But  the  law  says  they  "  shall  be  rei-ssued,  paid  out  again,  and 
kept  in  circulation."'  Now,  what  becomes  of  the  gentleman's  con- 
tention that  the  Secretary  may  retain  these  notes  and  issue  bonds 
for  other  money  \\  ith  which  to  meet  his  engagements? 

If  the  gentleman  will  examine  the  debates  in  the  Senate  while 
the  bill  was  pending  there,  he  will  see  that  the  language  used  was 
purposely,  deliberately  chosen. 

Why.  sir,  an  effort  was  made  to  amend  and  modify  the  bill 
somewhat  after  the  fashion  of  the  gentleman's  conception  of  this 
law. 

1829 


Senator  Mathews  offered  this  substitute  for  that  very  manda- 
tory provision: 

They  shall  be  reissued  from  time  to  time  as  the  exigencies  of  the  public  serv- 
ice may  require. 

That  svibstitute  was  defeated,  and  the  law  was  enacted  as  I  have 
given  it.  There  is  no  escape  from  this  sitxiation  except  by  legisla- 
tion, and  this  substitute  does  not  attempt  to  deal  with  that  which 
seems  to  me  the  most  serious  cause  of  the  present  complication. 
It  neither  proposes  to  retire  the  Treasury  notes  nor  to  modify  the 
law  which  compels  their  post-redemption  issue. 

RETIRE  THE  TREASURY  NOTES. 

Mr.  Chairman,  if  the  Government  embarks  in  banking  and  is- 
sues paper  promises  intended  to  circulate  as  money  it  becomes 
amenable  to  the  conditions  and  responsibilities  which  attach  to 
that  kind  of  business.  It  must  be  ready  at  all  times  to  redeem  its 
promises  in  money  on  demand  or  they  will  depreciate.  In  order 
to  float  these  promises  and  make  them  equal  to  gold  it  was  thought 
necessary  to  accumulate  $100,000,000  in  gold,  and  that  sum  has 
been  so  kept  except  when  temporarily  depleted. 

Mr.  Chairman,  I  am  in  favor  of  retiring  these  Treasury  notes 
entirely  and  finally.  I  wish  to  see  our  Government  relieved  from 
the  responsibility  of  the  banking  business,  the  Treasury  limited 
to  the  exercise  of  its  legitimate  functions  under  the  Constitution, 
and  the  people  secured  against  the  danger  of  an  unsound  cur- 
rency. 

THE  CONSTITUTIONAL   QUESTION. 

First,  I  wish  to  call  attention  to  the  fact  that  the  power  of  the 
Government  under  the  Constitution  to  issue  its  notes  and  make 
them  a  legal  tender  in  payment  of  debt  is  and  always  has  been  dis- 
puted. In  the  "Plan  of  a  Federal  Constitution,"  as  proposed  by 
Charles  Pinckney,  among  the  powers  which  were  to  be  given  to  the 
"  Legislature  of  the  United  States  "  there  were  enumerated,  "Bor- 
row money  and  emit  bills  of  credit." 

In  committee  this  language  was  changed  so  that  it  read  when 
reported: 

Borrow  money  and  emit  bills  on  the  credit  of  the  United  States. 

In  the  convention  Gouverneur  Morris  moved  to  strike  out  the 
words  "and  emit  bills,"  and  the  motion,  after  a  full  debate,  was 
carried  by  the  votes  of  all  the  States  but  two,  and  the  clause  was 
made  to  read  as  it  now  stands:  ' '  Borrow  money  on  the  credit  of  the 
United  States." 

An  outline  of  that  debate  may  be  found  in  the  Madison  Papers, 
and  if  anyone  has  any  doubt  as  to  the  purpose  of  that  body  to  for- 
ever ijrohibit  Government  issiies  of  paper  money,  an  examination 
of  that  discussion  will  remove  that  doubt.  Mr.  Madison  said  that 
this  action  was  taken  to  cut  off  the  pretext  for  a  paper  currency, 
and  particularly  for  making  the  bills  a  tender  either  for  public  or 
private  debts. 

It  has  been  contended,  I  believe,  by  some  that  the  authority  to 
coin  money  included  the  power  to  issue  a  legal-tender  paper  cur- 
rency, but  it  was  provided  in  another  section  that  no  State  should 
have  power  to  make  anything  but  ' '  gold  and  silver  coin  a  tender 
in  payment  of  debts."  It  would  therefore  seem  that  having  dis- 
cussed and  rejected  the  only  proposition  which  they  thought  might 
1829 


confer  that  power  ii])on  Congress  and  having  expressly  prohibited 
it  to  the  States,  the  framers  of  the  Constitution  had  limited  legal- 
tender  money  to  gold  and  silver  coin. 

In  a  letter  written  by  Mr.  Madison  to  Thomas  Jefferson,  while 
the  Convention  was  in  session  at  Philadelphia  in  July,  1787,  he 
said: 

*  *  *  I  am  still  iinder  the  mortification  of  being  restrained  from  disclos- 
ing any  part  of  their  proceedings.  As  soon  as  I  am  at  liberty  I  will  endeavor 
to  make  amends  for  my  silence,  and  if  I  ever  have  the  pleasure  of  seeing  you 
1  shall  bo  able  to  give  you  full  gratification. 

In  this  letter,  written  as  you  see  at  the  very  time  and  place  when 
and  where  the  Constitution  was  being  discussed  and  created,  Mr. 
Madison  adds,  referring  to  paper  issues: 

Nothing  but  evil  springs  from  this  imaginary  money  wherever  it  is 
tried,  and  yet  the  appetite  for  it  where  it  has  not  been  tried  continues  to  be 
felt. 

That  great  Missourian,  Thomas  H.  Benton,  who  was  then  the 
especial  champion  of  President  Jackson,  said  in  the  Senate  in 
1834: 

The  power  granted  to  Congress  to  coin  money  is  an  authority  to  stamp 
metallic  money,  and  is  not  an  authority  for  emitting  slips  of  paper  contain- 
ing promises  to  pay  money. 

He  said  that  he — 

•was  one  of  those  who  believed  that  the  Government  of  the  United  States 
was  intended  to  be  a  hard-money  Government.  *  *  *  It  is  the  money  and 
the  only  money  of  the  Constitution,  and  every  early  statement  on  the  sub- 
ject of  money  confirms  that  idea. 

Mr,  Webster,  in  discussing  this  subject  in  the  Senate  in  1836, 
said: 

Most  unquestionably  there  is  no  legal  tender  and  there  can  be  no  legal 
tender  in  this  country  under  the  authority  of  this  Government  or  any  other 
but  gold  and  silver,  either  the  coinage  of  our  own  mints  or  foreign  coins,  at 
rates  regulated  by  Congress.  This  is  a  constitutional  principle,  perfectly 
plain  and  of  the  highest  importance. 

That  such  was  the  belief  of  those  who  framed  the  Constitution 
and  of  those  who  interpreted  that  great  instrument  to  us  is  shown 
by  the  fact  that  never  during  the  lifetime  of  any  of  those  illustri- 
ous men  was  a  legal-tender  issue  proposed  or  seriously  discussed. 

Such,  I  repeat,  Mr.  Chairman,  were  the  views  of  the  fathers  of 
the  Republic,  and  such  were  the  opinions  and  the  practices  of 
those  who  administered  this  Government  for  three-quarters  of  a 
century  prior  and  up  to  the  passage  of  the  first  legal-tender  act  in 
1862. 

If  you  will  read  the  debates  in  this  House  and  in  the  Senate 
upon  the  constitutionality  of  that  measure  you  will  be  impressed 
with  the  reluctance  which  characterized  the  resort  to  this  ex- 
traordinary and  theretofore  entirely  unassumed  authority. 

Mr.  Conkling  said: 

The  proposition  is  a  new  one.  No  precedent  can  be  urged  in  its  favor;  no 
suggestion  of  the  existence  of  such  a  power  can  be  found  in  the  legislative 
history  of  the  country. 

:::  :l:  *  O  *  :::  V^ 

It  is  hardly  too  much  to  say,  therefore,  that  the  uniform  and  universal  judg- 
ment of  statesmen,  jurists,  and  lawyers  has  denied  the  constitutional  right  of 
Congress  to  make  paper  a  legal  tender  for  debts  to  any  extent  whatever. 

Mr.  Pendleton  said: 

When  I  come  to  examine  the  powers  of  Congress  according  to  the  principles 
of  interpretation  to  which  I  adhere,  I  look  to  the  grants  of  the  Constitution. 
I  find  no  gi'ant  of  this  power  in  direct  terms  or,  as  I  think,  by  fair  implica- 
1829 


tion.  It  is  not  an  accidental  omission :  it  is  not  an  omission  through  inadvert- 
ency; it  was  intentionally  left  out  of  the  Constitution,  because  it  was  de- 
signed that  the  power  should  not  reside  in  the  Federal  Government. 

Those  who  favored  the  bill  did  so  tinder  the  plea  that  it  was  a 
"war  measure,"  a  "measure  of  necessity."    Mr.  Kellogg  said: 

If  this  question  came  up  in  ordinary  times  I  am  frank  to  confess  that  I 
might  perhaps  have  had  some  doubt  of  its  constitutionality  sufficient  to  induce 
me  to  oppose  it.  *  *  *  But,  sir,  in  this  our  extremity,  while  we  are  strug- 
gling to  perpetuate  our  Government,  I  am  willing  to  go  to  the  very  verge  of 
the  Constitution. 

Senator  Fessenden  rested  the  argument  for  the  action  "upon 
the  ground  of  absolute,  overwhelming  necessity."  He  put  it  in  the 
same  category  with  such  acts  as  confiscation.     He  said: 

The  question  after  all  returns:  Is  this  measure  absolutely  indispensable  to 
procure  means?    If  so,  as  I  said  before,  necessity  knows  no  law. 

Mr.  Chairman,  it  was  under  conditions  and  influences  such  as 
appear  from  the  statements  contained  in  this  discussion  that  these 
notes  were  issued.  It  is  true  they  were  u]3held  by  the  courts  and 
their  constitutionality  affirmed,  yet  even  here  they  were  regarded 
and  treated  not  as  money,  but  as  a  Government  loan,  forced  tipon 
the  people  to  meet  a  great  emergency.  I  quote  from  the  opinion 
of  Justice  Bradley.     He  says: 

It  is  a  pledge  of  the  national  credit.  It  is  a  promise  by  the  Government  to 
pay  dollars.  The  standard  of  value  is  not  changed.  The  Government  sim- 
ply demands  that  its  credit  shall  be  accepted  and  received  by  public  and  pri- 
vate creditors  during  the  pending  exigency. 

i^  if  Hi  it  if  *  * 

No  one  supposes  that  these  Government  certificates  are  never  to  be  paid— 
that  the  day  of  specie  payment  is  never  to  return.  And  it  matters  not  in 
what  form  they  are  issued.  *  *  *  Through  whatever  changes  they  pass- 
their  ultimate  destiny  is  to  be  paid. 

THE  PROMISE  OF  REDEMPTION. 

But,  Mr.  Chairman,  not  onlj^  were  these  notes  issued  as  I  have 
shown  by  a  great  stretch  of  constitutional  authority,  under  the 
pressing  plea  of  military  necessity,  but  they  were  accompanied 
with  a  promise  of  redemption. 

The  Hon.  Hugh  McCulloch,  an  able,  honored,  and  distinguished 
citizen  of  Indiana,  in  his  report  as  Secretary  of  the  Treasury  of 
December  4,  1865,  in  discussing  this  subject,  said: 

The  present  legal-tender  acts  were  war  measvires,  and  while  the  repeal  of 
those  provisions  which  made  the  United  States  notes  lawful  money  is  not 
now  recommended,  the  Secretary  is  of  the  opinion  that  they  ought  not  to  re- 
main in  force  one  day  longer  than  shall  be  necessary  to  enable  the  people  to 
prepare  for  a  return  to  the  constitutional  currency.  It  is  not  supposed 
that  it  was  the  intention  of  Congress  by  these  acts  to  introduce  a  standard 
of  value  in  times  of  peace  lower  than  the  coin  standard,  much  less  to  per- 
petuate the  discredit  which  must  attach  to  a  great  nation  which  dishonors 
Its  own  obligations  by  unnecessarily  keeping  in  circulation  an  irredeemable 
paper  Qurrency.  It  has  not  in  times  past  been  regarded  as  the  province  of 
Congi'ess  to  furnish  the  people  directly  with  money  in  any  form.  Theii-  au- 
thority is  to"ooin  money  and  fix  the  value  thereof,"  and  inasmuch  as  a 
mixed  currency,  consisting  of  paper  and  specie,  has  been  foiind  to  be  a  com- 
mercial necessity  it  would  seem  also  to  be  their  duty  to  provide,  as  has  been 
done  by  the  national-currency  act,  that  this  paper  currency  shall  be  secured 
beyond  any  reasonable  contingency.  To  go  beyond  this,  however,  and  issue 
Government  obligations,  making  them  by  statute  a  legal  tender  for  all  debts, 
public  and  private,  is  not  believed  to  be  under  ordinary  circumstances  within 
the  scope  of  their  duties  or  constitutional  powers. 

The  reasons  which  are  sometimes  urged  in  favor  of  United  States  notes  as 
a  permanent  currency  are  the  saving  of  interest  and  their  perfect  safety  and 
uniform  value. 

The  objections  to  such  a  policy  are  that  the  i)aper  circulation  of  the  cur- 
rency should  be  flexible,  increasing  and  decrea.sing  according  to  the  require- 
ments of  legitimate  business,  while  if  furnished  by  the  Government  it  would 
1829 


6 

be  quite  likely  to  be  governed  hy  the  necessities  of  the  Treasury,  or  the  in- 
terests of  parties,  rattier  than  the  demands  of  commerce  and  trade.  Besides 
a  permanent  Government  currency  would  be  greatly  in  the  way  of  public 
economy,  and  would  give  to  the  party  in  possession  of  the  Government  a 
power  which  it  might  oe  under  strong  temptation  to  use  for  other  purposes 
than  the  public  good— keeping  the  question  of  the  currency  constantly  before 
the  pulilic  as  a  political  question,  than  which  few  things  would  be  more  inju- 
rifius  to  business. 

But  the  great  and  insuperable  objection  as  already  stated  to  the  direct  is- 
sue of  notes  by  the  Government,  as  a  ixjlicy.  is  the  fart  tliat  tlirCxDVLTntnent 
of  the  United  States  is  one  of  limited  and  defined  powers,  and  that  the  au- 
thority to  issue  notes  as  money  is  neither  expressly  given  to  Congre.ss  by  the 
Constitution,  nor  fairly  to  be  inferred,  except  as  a  measure  of  necessity  in  a 
great  national  exigency.  No  consideration  of  a  mere  pecuniary  charai'ter 
should  induce  an  exercise  by  Congress  of  powers  not  clearly  contemplated  by 
the  instrument  upon  which  our  political  tabric  was  established. 

Mr.  Chairman,  this  was  the  view  taken  by  the  Secretary  in  the 
very  first  report  made  by  him  after  the  close  of  the  war.  It  has 
practically  been  the  view  maintained  by  all  the  Secretaries  from 
that  day  to  this,  so  far  as  I  am  advised 

Mr.  BAILEY.  If  the  gentleman  will  permit  an  interruption, 
does  he  not  remember  that  Senator  Sherman  expressly  recom- 
mended that  they  should  not  Ije  retired. 

Mr.  COOPER  of  Indiana,  Perhaps  I  ought  to  except  Senator 
Sherman  on  the  suggestion  of  the  gentleman  from  Texas:  but  I 
am  in  doubt  of  it,  for  I  know  that  he  favored  at  one  time  their  re- 
tirement. It  is  possible  that  he  has  been  on  both  sides  of  the  ques- 
tion.    [Laughter.] 

Mr.  WHEELER  of  Alabama.  Let  me  remind  my  friend  from 
Indiana,  for  whom  I  entertain  the  very  highest  regard,  that  a 
Democratic  House  passed  a  law  expressly  providing  against  their 
retirement  beyond  S84(5.O0U.OO0. 

Mr.  COOPER  of  Indiana.  I  can  not  be  interrupted  now.  I  will 
answer  my  good  friend  from  Alabama  after  I  call  attention  to 
these  recommendations  of  the  Secretaries  in  brief. 

Secretary  Bristow  in  his  report  December  7.  1874,  following  the 
example  of  his  predecessors  in  office,  made  an  earnest  appeal  for 
the  retirement  of  these  notes  and  gave  utterance  to  this  very 
sound  and  timely  warning: 

The  history  of  irredeemable  paper  currency  repeats  itself  whenever  and 
wherever  it  is  used.  It  increases  present  prices,  deludes  the  laborer  with  the 
idea  that  he  is  getting  higher  wages,  and  brings  a  fictitious  prosperity  from 
which  follow  inflation  of  business  and  credit  and  excess  of  enterpise  in  ever- 
increasing  ratio,  until  it  is  discovered  that  trade  and  commerce  have  become 
fatally  diseased,  when  confidence  is  destroyed,  and  then  comes  the  shock  to 
credit,  followed  by  disaster  and  depression,  and  a  demand  for  relief  by  fur- 
ther issues. 

Again,  Mr.  Chairman,  this  report  reads  almost  prophetically  of 
conditions  which  we  have  but  recently  seen: 

The  universal  use  of,  and  reliance  upon,  such  a  currency  tends  to  blunt  the 
moral  sense  and  impair  the  natural  self-dependence  of  the  people,  and  trains 
them  to  the  belief  that  the  Government  must  directly  assist  thdi'  individual 
fortunes  and  bu.siness,  help  them  in  their  personal  aifaii's,  and  ciialtle  them  to 
discharge  theri  debts  Ijy  partial  payment.  This  inconvertilile  i)Hi)er  currency 
begets  the  delusion  that  the  remedy  for  private  pecuniary  distress  is  in  legis- 
lative mea.sures,  and  makes  the  people  unmindful  of  the  fact  that  the  true 
remedy  is  in  greater  production  and  less  spending,  and  that  real  prosperity 
comes  only  from  individual  eff(}rt  and  thrift. 

In  1876  Secretarj-  Morrill  said: 

The  United  States  notes,  commonly  known  as  legal  tender,  regarded  as  a 
substitute  for  money,  are  an  anomaly  in  our  monetary  system,  tolerable  and 
possible  only  in  the  exigencies  of  civil  war— the  offspring  of  its  perils  and 
limited  to  its  necessities.    To  allow  their  continuance  as  such,  after  the  cause 

is2:) 


which  justified  their  existence  had  ceased,  is  to  violate  the  conditions  of  their 
inception  and  to  sanction  what  was  only  tolerable  as  a  necessity,  by  impress- 
ing upon  it  the  stamp  of  legitimacy. 

In  December.  1884,  Secretary  McCulloch,  having  been  called 
again  to  administer  the  duties  of  this  high  and  responsible  office 
nearly  twenty  years  after  the  date  of  his  report  from  which  I  first 
quoted,  said: 

A  government  which  engages  in  banking  by  furnishing  a  paper  circulating 
medium  must  be  governed  by  the  rules  which  prevail  with  prudent  bankers, 
and  be  constantly  prepared  to  meet  such  calls  as  may  be  made  upon  it. 

Many  persons  regard  legal-tender  notes  as  being  money,  and  hold  that  no 
means  should  be  provided  for  their  redemption.  That  this  is  a  delusion  will 
be  proven  whenever  there  is  a  large  demand  for  gold  for  export.  They  are 
not  money,  but  merely  promise.s  to  pay  it.  and  the  Government  must  be  pre- 
pared to  redeem  all  that  may  be  presented  or  forfeit  its  character  for  sol- 
vency. 

This  language,  used  ten  years  ago,  is  vindicated  and  exemplified 
to-day  by  oiir  exj)erience  and  j^resent  situation.  And  while  some 
may  continue  to  believe  that  these  notes  are  money,  and  for  cer- 
tain reasons  so  contend,  it  is,  it  must  be,  perfectly  plain  to  those 
who  desire  to  know  the  truth  that  they  are  drafts  upon  the  na- 
tional Treasury,  and  that  their  nonpayment  means  national  dis- 
honor. 

Mr.  Chairman,  no  more  able,  conscientious,  patriotic  man  ever 
presided  over  the  Treasury  Department  than  the  late  lamented 
Manning.  I  wish  especially  to  call  the  attention  of  my  Demo- 
cratic friends  to  the  very  able  report  made  by  him  on  this  subject. 
I  refer  to  his  annual  report  of  December  6,  1886.  I  wish  I  had 
time  to  read  extensively  from  this  report,  but  I  have  not,  and  will 
content  myself  with  calling  your  attention  to  his  concluding  rec- 
ommendations.   No  better  Democratic  platform  could  be  written: 

I  therefore  respectfully  recommend: 

1.  Repeal  of  the  clause  in  the  act  of  February  38, 1878,  making  compulsory 
Treasury  purchases  of  silver,  for  the  reason  heretofore  given  and  in  order  to 
reduce  surplus  and  unnecessary  taxation  S31,0IK),I)(K)  a  year. 

2.  Further  reduction  of  surplus  taxation,  beginning  in  a  manner  which  will 
be  suggested  below,  close  down  to  the  necessities  of  the  Government  econom- 
ically administered. 

3.  Repeal  of  the  act  of  May  31, 1878,  making  compulsory  post-redemption 
issues  and  reissues  of  United  States  legal-tender  notes,  thus  facilitating— 

4.  Gradual  purchase  and  payment  of  $:W().ri.'<l,(  ilii  i  )utstandingpronii^^soiy  notes 
of  the  United  States  with  the  present  and  ai-c-ruiug  Treasury  surplus,  issuing 
silver  certificates  in  their  room,  and  gold  certitti'ates  if  need  be,  with"nt  von- 
traction  of  the  present  circulating  volume  of  the  currency,  these  notes  (called 

rfeenbacks)  being  now  the  only  debt  due  and  payable  before  1891  except  the 
per  cent  bonds,  which  are  probably  all  to  be  called  and  paid  early  in  the 
ensuing  fiscal  year. 

The  extraordinary  con,iunction  of  opportunity  and  necessity  making  prac- 
ticable so  complete  a  reform  in  our  currency  and  so  large  a  reform  in  our  tax- 
ation, will,  perhaps,  excuse  a  reference  to  the  conditions  and  the  method  of 
their  execution  which  were  set  out  in  my  last  annual  report,  or  any  repetition 
of  what  I  have  already  had  the  honor  to  suggest  in  respectfully  urging  upon 
Congress  the  easy  provision  of  a  better  currency  for  the  people  of  the  United 
States  than  the  best  now  possessed  by  any  nation—"  a  currency  in  which  every 
dollar  note  shall  be  the  representative  certificate  of  a  coin  dollar  actually  in 
the  Treasury  and  payable  on  demand;  a  currency  in  which  our  monetary 
unit,  coined  in  gold,  or  its  equivalent  coined  in  silver,  shall  not  be  suffered  to 
part  company." 

The  act  making  compulsory  post-redi'inption  i.ssues  and  reissues  of  United 
States  notes  and  the  act  making  cdinpulscn-y  Treasury  purchases  of  silver  are 
each  a  separate  menace  to  the  public  triUKjuility,  are  each  injurious  to  tlie 
public  morals,  the  public  faith,  and  the  public  interest.  But  they  do  not 
double  our  difiiculties.  On  the  contrary,  the  repeal  of  both  acts,  and  the  use 
of  the  Treasury  metal  surplus  in  the  sul  isti  tution  of  (;oin  certificates  for  green- 
backs, will  convert  our  worst  kind  of  paijer  currency  into  the  best  kind- 
indefinite  promissory  notes  of  debt  made  legal  tender  will  be  converted  into 
representative  certificates  of  coin,  held  subject  to  demand. 
1839 


8 

The  present  Secretary  of  the  Treasury  has  had  devolved  upon 
him  the  complex  difficulties  which  his  predecessors  foresaw  and 
plainly  pointed  out,  and  which  are  due  to  laws  and  conditions  for 
which  he  is  in  no  way  re>ponsible.  The  deficiencies  in  the  reve- 
nues are  mainly  traceable  to  three  causes.  First,  the  McKinley 
tariff  law,  which  by  the  confessions  of  its  author  and  friends  was 
intended  to  curtail  revenues,  and  which  did  yield  an  annually  de- 
creasing income  to  the  Treasury;  second,  to  the  profligate  legis- 
lation of  the  Fifty-first  Congress;  and  third,  to  the  unreasonable 
delay  in  the  passage  of  the  Wilson  bill,  caused  by  factious  oppo- 
sition and  i)artisan  obstruction.  The  resiilting  deficiencies  have 
only  served  to  expose  the  weakness  of  the  Treasury  situation  and 
to  render  aciite  the  ills  which  have  continually  lurked  in  its  system. 

In  his  annual  report  for  1893  he  very  clearly  states  the  situation 
as  he  finds  it,  and  in  so  far  as  that  situation  is  complicated  by  the 
existence  of  the  Treasury  notes  and  the  laws  relating  to  them  he 
says: 

So  long  as  tho  Government  continues  the  unwise  policy  of  keeping  its  own 
notes  ontstandiufr  to  circulate  as  currency,  and  undertakes  to  provide  for 
their  redemption  in  coin  on  presentation,  it  will  be,  in  my  opinion,  essential 
for  the  Scci'otary  ol  the  Treasury  to  possess  the  means,  or  to  have  the  clear 
and  undiiuhted  authority  to  secure  the  means,  which  may  from  time  to  time 
become,  necessary  to  enaole  him  to  meet  such  emergencies  as  the  one  winch 
has  recently  occurred  in  our  financial  affairs.  Under  existintr  le,t,'islation  the 
Treasury  Department  exercises  to  a  lartcer  exti-nt  than  all  the  other  finan- 
cial institutions  of  the  country  comliined  the  functions  of  al)a]ik  <>i  issue,  and 
while  the  credit  of  the  Government  is  so  strong  that  it  may  not  be  necessary 
to  maintain  at  all  times  the  actual  coin  reserve  which  experience  has  shown 
to  be  refiuisite  in  the  case  of  ordinai-y  banking  companies,  still  it  would  be 
mivnlfestly  imprudent,  to  say  the  least,  not  to  adopt  such  precautionary  meas- 
ures as  would  enable  the  Government  in  times  of  unusual  mouetai-y  distni-b- 
ance  to  keep  its  faith  with  the  peoiDle  who  hold  its  notes  and  coins  1  ly  i)ri  )tect- 
ing  them  against  the  disastrous  effects  of  an  irredeemable  and  depreciated 
currency. 

While  the  laws  have  imposed  upon  the  Treasury  Department  all  the  duties 
and  responsibilities  of  a  bank  of  issue,  and  to  a  certain  extent  the  functic^ns  of 
a  bank  of  deposit,  they  have  not  conferred  upon  the  Secretary  any  part  of 
the  discretionary  powers  usually  possessed  by  the  executive  heads  of  insti- 
tutions engaged  in  conducting  this  character  of  financial  business.  He  is 
bound  by  mandatory  or  prohibitory  provisions  in  the  statutes  to  do  or  not  do 
certain  things,  without  regard  to  the  circumstances  which  may  exist  at  the 
time  he  is  required  to  act,  and  thus  he  is  allowed  no  opportunity  to  take 
advantage  of  changes  in  the  situation  favorable  to  the  interests  of  the  Gov- 
ernment, or  to  protect  its  interests  from  injury  when  threatened  by  ad- 
verse events  or  influences.  He  can  neither  negotiate  temporary  loans  to 
meet  casual  deficiencies  nor  retii'e  and  cancel  the  notes  of  the  Government 
without  substitiiting  other  currency  for  them  when  the  revenues  are  redun- 
dant or  the  circulation  excessive,  nor  can  he  resort,  except  to  a  very  limited 
extent,  to  any  of  the  expedients  which  in  his  judgment  may  be  absolutely 
neces.sary  to  prevent  injurious  disturbances  of  the  fanancial  situation.  These 
considerations  emphasize  the  necessity  for  such  legislation  as  will  make  the 
Department  more  independent  of  speculative  interests  and  operations  and 
enable  it  to  maintain  the  credit  of  the  Government  upon  a  sound  and  secure 
basi.s. 

Whatever  objections  may  be  urged  against  the  maintenance  of  a  large  coin 
reserve,  procured  by  the  sale  of  interest-bearing  bonds,  it  must  be  evident 
that  this  course  can  not  be  safely  avoided  unless  the  Government  abandons 
the  policy  of  issuing  its  own  notes  for  circulation  and  limits  the  functions  of 
the  Treasury  Department  to  the  collection  and  disbursement  of  the  public 
revenues  for  purely  public  ])urposes  and  to  tho  performance  of  such  other 
administrative  duties  as  may  be  appropriate  to  the  character  of  its  organiza- 
tion as  a  branch  of  the  executive  authority. 

Now,  Mr.  Chairman.  I  have  brought  down  the  expressions  of 
opinion  which  have  been  carefully,  solemnly  made  from  time  to 
time  by  those  who  have  l)een  charged  ^vith  responsibility  in  this 
Department.  They  are  full  of  instruction;  they  ought  to  have 
great  weight  with  the  legislative  branch  of  the  Government. 
1829 


9 

It  is  not  necessary,  Mr.  Chairman,  to  further  quote  the  opinions 
and  recommendations  which  have  come  to  us  from  time  to  time 
from  those  who  have  been  in  position  to  realize  and  to  feel  the 
great  embarrassment  and  danger  incident  to  the  issue  and  main- 
tenance of  these  Treasury  notes,  nor  to  attempt  to  further  em- 
phasize their  appeal  for  legislation  which  will  cause  them  to  be 
finally  redeemed.  But  to  my  Democratic  friends  let  me  say  that 
I  realize  that  some  names  are  more  potent  than  others  in  our  coun- 
cils, and  I  wish  to  call  to  your  minds  the  testimony  and  add  to 
what  I  have  said  here  to-day  the  approval  and  sanction  of  one  who 
has  long  since  passed  from  among  us,  but  whose  spirit  still  inspires 
our  highest  purpose  and  commands  our  most  loyal  service.  I  re- 
fer to  the  name  and  the 

TEACHINGS  OF  THOMAS  JEFFERSON. 

What  I  am  about  to  read  is  from  a  letter  addressed  by  Mr.  Jef- 
ferson to  the  President.  It  is  dated  Monticello,  October  15,  1814. 
I  ought  to  say  perhaps  in  explanation  before  I  read  this  letter 
that  during  the  war  of  1813  resort  was  had  to  the  issue  of  Treasury 
notes,  not  legal  tender,  for  the  purpose  of  carrying  on  that  war, 
and  it  was  with  reference  to  that  matter  that  he  said: 

Sux)pose  we  require,  to  carry  on  the  war,  an  annual  loan  of  twenty  millions; 
then  I  propose  that  in  the  first  year  you  shall  lay  a  tax  of  two  millions,  and 
emit  twenty  millions  of  Treasury  notes,  of  a  size  proper  for  circulation,  and 
bearing  no  interest,  to  the  redemption  of  which  the  proceeds  of  that  tax  shall 
be  inviolably  pledged  and  apjilied  by  recalling  annually  their  amount  of  the 
identical  bills  founded  on  them.  The  second  year  lay  another  tax  of  two- 
millions  and  emit  twenty  millions  more.  The  third  year  the  same,  and  so  on 
until  you  have  reached  the  maximum  of  taxes  which  ought  to  be  imposed. 

Here  is  a  precedent  for  our  proposed  action — noninterest-bear- 
ing  Treasury  notes,  to  be  redeemed  from  the  proceeds  of  a  tax 
inviolably  pledged  and  applied.    Further  on  he  says: 

All  we  should  have  to  do  would  be,  when  the  war  should  be  ended,  to  leave 
the  gradual  extinction  of  these  notes  to  the  operation  of  the  taxes  pledged 
for  their  redemption;  not  to  suffer  a  dollar  of  paper  to  be  emitted  either  by 
public  or  private  authority,  but  let  the  metallic  medium  flow  back  into  the 
channels  of  circulation  and  occupy  them  until  another  war  should  oblige  us 
to  recur,  for  its  support,  to  the  same  resource  and  the  same  process  on  the 
circulating  medium. 

Mr.  Chairman,  he  does  not  content  himself  with  a  mere  outline 
of  a  plan,  but  with  characteristic  perspicuity  this  great  man.iier- 
fectly  tireless  in  detail,  accompanies  his  letter  with  a  table  care- 
fully wrought  out  by  which  he  indicates  vnth  mathematical  ac- 
curacy the  very  year  in  which  the  last  of  the  notes  must  be  paid. 

I  have  read  from  the  sixth  volume  of  Jefferson's  Works,  on  pages 
392  and  393. 

In  brief,  the  remedy  proposed  by  Mr.  Jefferson  was  to  pay  the 
Treastiry  notes,  stop  the  further  issue  of  paper  money,  and  "let 
the  metallic  medium  flow  back  into  the  channels  of  circulation." 

Again,  on  page  139  of  the  same  volume,  he  says: 

Every  one  knows,  that  although  not  literally  it  is  nearly  true  that  every 
paper  dollar  emitted  banishes  a  silver  one  from  the  circulation.  A  nation, 
therefore,  making  its  purchases  and  payments  with  bills  fitted  for  circula- 
tion thrusts  an  eqiial  sum  of  coin  out  of  circulation. 

There  is  in  this  no  suggestion  of  a  permanent  paper  issue.  On 
the  contrary,  he  never  spared  to  teach  the  distinction  between 
money  and  paper  promises  to  pay  money,  which  to  his  clear  com- 
prehension was  no  other  than  the  difference  between  debt  and 
property. 

To  my  friends  around  me  here  who  still  contend  for  the  free  and 
unlimited  coinage  of  silver,  permit  me  to  say  that  I  am  wholly  un- 


10 

able  to  iTnderstand  how  you  can  consistently  ask  for  a  wider  use 
of  silver  while  you  insist  iipon  the  retention  of  this  paper  money. 
Why  not  retire  it  and  •'  let  the  metallic  medium  flow  back  into  the 
channels  of  circulation." 

Treasury  notes  have  been  resorted  to  as  a  method  of  borrowing 
by  the  Government  at  five  different  periods  in  our  history.  First, 
in  the  war  of  1812;  second,  in  the  panic  of  \h:]7:  third,  during  the 
Mexican  war;  fourth,  in  the  panic  of  1857;  and  fifth,  during  the  late 
civil  war. 

As  I  have  already  shown,  none  of  these  notes  were  made  a  legal 
tender  in  the  payment  of  debts  prior  to  the  act  of  1862.  All  notes 
issued  prior  to  that  were  based  solely  upon  the  power  to  boiTow 
money,  and  nearly  all  of  them  bore  some  rate  of  interest.  As  bear- 
ing upon  the  proposition  to  retii'e  our  outstanding  Treasury  notes, 
I  desire  to  call  attention  to  the  opinion  of  Mr.  Benton,  expressed 
in  the  Senate  on  the  occasion  of  the  authorization  of  the  notes  of 
1837: 

BEXTOX  ON  TREASURY  NOTES. 

I  will  now  say  a  few  words  on  the  policy  of  issuing  Treasury  notes  in  time 
of  peace,  or  even  in  time  of  war,  until  the  ordinary  resources  of  loans  and 
taxes  had  been  tried  and  exhausted.  I  am  no  friend  to  the  issue  of  Treasury 
notes  of  any  kind.  As  loans  they  are  a  disgiiised  mode  of  borrowing  and 
easy  to  slide  into  a  currency.  As  a  currency  it  is  the  most  seductive,  the 
most  dangerous,  and  the  most  liable  to  abuse  of  all  the  descriptions  of  paper 
money.  The  stamping  of  paper  (by  the  Cxovernment )  is  an  operation  so  much 
easier  than  the  laying  of  taxes  or  of  borrowing  money  tliat  a  government 
in  the  habit  of  paper  emissions  woiild  rarely  fail  in  an  emergency  to  indulge 
itself  too  far  in  the  employment  of  that  resource  to  avoid  as  much  as  pos- 
sible one  less  auspicious  to  present  popularity. 

So  said  General  Hamilton,  and  Jefferson,  Madison,  Macon,  Randolph,  and 
all  the  fathers  of  the  Republican  (Democratic)  church  concurred  with  him. 
These  sagacious  statesmen  were  shy  of  this  facile  and  seductive  resource, 
'■  so  liable  to  abuse  and  so  certain  of  "being  abused."  They  held  it  inadmissi- 
ble to  recur  to  it  in  time  of  peace,  and  that  it  could  only  te  thought  of  amidst 
the  exigencies  and  perils  of  war,  and  that  after  exhausting  the  direct  and 
responsible  alternative  of  loans  and  taxes.  Bred  in  the  school  of  these  great 
men,  I  come  here  at  this  session  to  oppose  at  all  risks  an  issue  of  Treasury 
notes.  I  preferred  a  direct  loan,  and  that  for  many  and  cogent  reasons. 
There  is  a  clear  authority  to  borrow  in  the  Constitution:  but  to  find  authority 
to  issue  these  notes  we  must  enter  the  field  of  constructive  powers. 

To  borrow  is  to  do  a  responsible  act;  it  is  to  incur  certain  accountability  to 
the  constituent,  and  heavy  censure  if  it  can  not  be  justified.  To  issue  these 
notes  is  to  do  an  act  w4iich  few  con.sider  of,  which  takes  but  little  hold  of  the 
public  mind,  which  few  condemn  aiid  some  encourage,  because  it  increases 
the  quantum  of  what  is  vainly  called  money.  Loans  are  limited  liy  the  ca- 
pacity at  least  of  one  side  to  borrow  and  of  the  other  to  lend.  The  issue 
ol'chese  notes  has  no  limit  but  the  will  of  the  makers  and  the  supply  Of  lamp- 
black and  rags." 

EVILS  OF  A  BAD   PRECEDENT. 

But,  Mr.  Chairman,  we  are  met  at  this  point  by  some  who  say 
that  conditions  have  changed;  that  we  can  do  what  our  fathers 
failed  to  accomplish,  what  other  nations  failed  to  do;  that  we  are 
above  the  ijiecedents,  and,  in  short,  that  we  are  great  enough  and 
strong  enough  to  discard  the  lessons  of  experience  and  defy  the 
limitations  of  established  pc^litical  science. 

It  is  also  contended  by  others  that  no  danger  exists  and  no 
harm  can  come  from  the  continuation  of  the  Treasury  notes  in 
circulation  because  the  amount  is  limited  and  the  responsibility 
not  great  when  compared  with  our  resoitrces. 

Mr.  Chairman,  the.se  are  the  very  reasons  that  should  move  us 
now  to  finally  close  this  transaction.  It  is  one  of  the  objections  to 
this  kind  of  paper  that  in  times  of  business  activity  and  general 
prosperity,  when  speculation  is  active  and  c(jnfidence  unshaken, 
it  is  mistaken  for  real  money  and  men  build  upon  it  as  if  it  were 
substance  in  itself,  and  then  when  the  time  comes,  as  it  always 

1829 


li 

does  come,  for  liquidation,  collapse  and  ruin  must  follow.  It  is 
also  one  of  the  symptoms  of  this  fatal  malady  that  the  patient 
can  not  be  iindeceived.  He  will  not  believe  that  his  misfortune 
is  due  to  the  deceptive  influences  of  the  inflated  medium,  biit 
rather  demands  that  the  artificial  stimulus  be  restored  and  even 
increased.  He  is,  to  borrow  an  expression  from  Jefferson,  like  a 
dropsical  man  crying  for  "Water!  water!"  or,  to  use  another  of  his 
expressions,  he  insists  upon  resorting  "for  the  ciire  of  colic  to  in- 
flations of  more  wind." 

Mr.  Chairman,  we  are  not  more  likely  to  perform  this  miracle 
of  making  monej^  out  of  "lampblack  and  rags"  than  have  the 
generations  of  men  who  have  gone  before  us.  We  have  not  yet 
discovered  the  philosopher's  stone.  On  the  contrary,  the  continu- 
ation of  these  notes  in  circulation  constantly  deceives  and  misleads 
those  who  know  nothing  of  the  cost  and  danger,  who  have  not 
felt  the  weight  of  responsibility  or  known  its  harassing  details; 
they  form  the  notbed  out  of  which  has  sprung  in  the  last  few 
years  so  many  noxious  weeds  that  the  poison  from  them  afflicts 
our  entire  body  politic. 

Perhaps  the  most  vicious  of  the  many  offspring  of  this  fruitful 
error  is  the  Stanford  loan  bill. 

It  was  introduced  in  the  Fifty-first  Congress  and  was  entitled 
"A  bill  to  provide  the  Government  with  means  stifBcient  to  sup- 
ply the  national  want  of  a  sound  circulating  medium."  The  se- 
ductive feature  of  the  bill  was  that  it  proposed  to  lend  United 
States  notes  to  ' '  every  person  who  is  a  citizen  of  the  United  States, 
or  who  has  declared  his  intentions  to  become  such,  and  who  is  the 
owner  in  fee  of  unincumbered  agricultural  lands."  And  for  that 
purpose  the  bill  directs  that — 

The  Treasurer  of  the  United  States  is  hereby  authorized  and  dii-ected  to 
Cause  to  be  printed,  signed,  and  ready  for  use  *  *  *  circiilating  notes  of 
the  United  States. 

The  very  able  report  of  the  Finance  Committee  against  this 
measure,  written  by  the  venerable  Senator  Morrill,  contains 
much  information  and  sound  reason.  Among  other  equally  good 
things,  it  says: 

Many  persons  may  be  captivated  with  the  plausible  idea  of  obtaining  cheap 
loans  and  plenty  of  money  on  easy  terms,  but  the  experience  of  enlightened 
nations  shows  wherever  siich  reckless  financial  experiments  have  been  tried 
that  they  have  ended  in  commercial  crises,  bankruptcy,  and  general  national 
disaster.    The  principle  is  unsound  and  can  not  bring  forth  good  fruit. 

It  may  not  be  improper  to  refer  briefly  to  some  of  the  ill-born  national  ex- 
amples which  conclusively  demonstrate  the  inexpedience  that  has  always 
attended  all  such  measures,  and  their  final  ruinous  catastrophe. 

The  Mississippi  scheme  was  started  in  Paris  in  1717  by  .lohn  Law,  embrac- 
ing trade  and  other  privileges,  and  finally  amalgamated  with  the  national 
bank,  which  issued  an  immense  amount  of  paper.  Law  had  promised  annual 
returns  of  130  per  cent.  The  stock  at  first  rose  to  an  enormous  premium. 
Upon  the  issue  of  50.0CI0  new  shares  there  were  3<)(1,0(X)  applicants.  Soon,  how- 
ever, gold  began  to  be  hoarded,  and  though  laws  were  passed  to  punish  all 
persons  who  were  found  in  possession  of  a  sum  beyond  a  fixed  amount,  large 
sums  were  sent  out  of  the  country,  to  Belgium  and  England,  for  safe-keeping. 
In  1720  the  bank  stopped  payment  and  the  whole  scheme  collapsed,  bringing 
ruin  upon  all  of  the  great  multitude  who  had  unwisely  put  faith  in  the  finan- 
cial soundness  and  integrity  of  the  Mississippi  scheme.  Law  immediately  fled 
the  country. 

The  insurmountable  disorder  of  the  French  finances,  and  annual  excess  or 
expenditures  beyond  receipts,  without  doubt  was  the  first  cause  of  the 
French  Revolution.  Fresh  loans  were  required  for  the  treasury  every  year. 
The  nobles  and  clergy  would  not  consent  to  be  taxed,  and  lenders  at  last  re- 
fused to  lend.  The  King  and  Queen  sent  all  their  plate  to  be  melted  down, 
but  it  was  insufficient  for  the  public  expenditures.  The  treatise  of  John  Law 
on  "Money  and  Trade  "  had  been  translated  into  French,  and  at  length  Tal- 
leyrand brought  forward  and  carried  his  measure  for  the  confiscation  of  the 
whole  ecclesiastical  property  of  the  Kingdom,  reserving  a  pension  to  the 
1839 


12 

clergy,  and  appropriating  what  was  estimated  at  £80,000,000  to  aid  the  public 
necessities. 

In  December,  178!),  the  assemlily  ordered  a  sale  of  church  and  crown  prop- 
erty to  the  amount  of  t'li'i,iiiKi.()»H»  and  decreed  that  a  paper  currency  should 
be  created  of  that  amount,  beariiif^  .">  jut  cent  interest,  and  called  assignat.s, 
for  the  redemption  of  which  the  confiscated  lands  were  to  be  sold.  Not  to 
enter  into  all  the  progressive  steps  taken,  in  less  than  5  months,  by  another 
decree,  the  assi^ats  were  declared  a  legal  tender,  with  interest  at  ^  per 
cent.  The  public  debt  rapidly  increased,  and  in  1790  now  assignats  were 
created  of  double  the  amount.  Further  large  amounts  were  created  in 
1791-9:2,  and  in  1793  the  assignats  wei-e  at  a  discount  of  30  per  cent.  Shop- 
keepers refused  them  for  prime  necessities  and  their  shops  were  plundered 
in  gc»neral  riots. 

With  the  creation  of  more  assignats  in  1793  the  convention  decreed  six 
years'  imprisonment  to  any  person  who  should  sell  assignats  at  less  than 
their  nominal  value,  or  make  any  difference  in  price  whether  i)aid  in  paper 
or  specie.  A  silver  franc  got  to  be  worth  six  m  v>aper.  Tlie  penalties  for 
making  any  difference  in  price  were  greatly  increased  and  death  was  decreed 
against  all  who  kept  back  from  public  sale  articles  of  first  necessity.  Trade 
and  production  ni>arly  ceased.  Public  functionaries  could  no  longer  live  on 
their  salaries  and  one-third  of  the  army  deserted. 

In  1795  the  a.ssignats  in  nonainal  value  amounted  to  $3,800,000,000,  and  had 
fallen  to  one-thousandth  part  of  their  nominal  value.  Finally,  the  Govern- 
ment refiised  to  ])art  with  the  national  domain  at  the  depreciated  value  of 
their  paper  currency,  and  destroyed  it  at  a  single  blow  by  decreeing  "that 
anyone  might  make  bargains  in  whatever  currency  he  pleased."  Thus 
dropped  out  of  circulation,  perhaps,  the  largest  batch  of  legal-tender  paper 
currency  ever  created,  notwithstanding  it  was  based  upon  land  security  and 
supported  by  all  the  terrors  of  national  power. 

The  Argentine  Republic  established  in  1886  a  great  national  mortgage  bank 
to  make  loans  on  the  h5^)Othecation  of  real  estate.  The  minister  of  finance 
regarded  it  as  "a  great  boon  to  the  i)eople  for  the  reason  that  land  is  the  great 
patrimony,  the  immense  capital  of  the  country,  and  every  facility,"  he  said, 

should  be  given  to  mobiUze  the  capital  and  increase  its  value."  Its  func- 
tions were  not  to  loan  money  on  mortgage,  but  to  issue  transferable  mortgage 
bonds  on  the  execution  of  mortgages  in  its  favor,  which  were  put  on  the  mar- 
ket for  what  they  would  fetch,  with  national  guaranties  to  the  holder  the 
service  of  interest  and  amortization. 

The  bonds  were  made  payable  to  bearer  and  bore  interest  at  not  exceeding 
8  per  cent,  and  with  an  annual  sinking  fund  for  their  ultimate  payment  of 
not  exceeding  2  per  cent.  The  chairman  and  dii'ect(;rs  were  appointed  by  the 
President  of  the  Republic.  The  bank  was  to  make  no  loan  of  less  than  S1,(m;)0 
nor  above  $250,0(X).     The  mortgage  extended  to  all  other  property  of  the  mort- 

f:agee,  though  not  mentioned  in  the  mortgage,  and  no  loan  was  to  be  granted 
or  more  than  half  the  value  of  the  property  mortgaged.  A  delay  of  over 
sixty  days  in  the  payment  of  the  hypothecary  obligation  authorized  the  bank 
to  put  up  for  sale  at  public  aiiction  the  property  mortgaged,  without  any 
legal  proceedings,  and  to  award  it  to  the  highest  bidder. 

It  is  not  necessary  to  say  that  the  financial  scheme  of  the  Argentine  Repub- 
lic has  been  hardly  more  fortunate  than  that  of  John  Law,  or  than  that  of 
the  assignats  of  France,  and  has  brought  shame  and  disaster  upon  the  credit 
of  the  Argentine  Repiablic.  The  inflated  paper  money  market  became  easy 
for  speculators,  but  specie  payments  were  soon  suspended,  gold  rose  to  over 
200  per  cent  premium  and  suddenly  went  out  of  the  country  to  pay  balances 
of  trade  and  interest  on  foreign  bonds,  and  the  Argentine  national-bank 
notes  are  now  worth  only  50  cents  on  the  dollar. 

The  Argentine  Government  is  grievously  embarrassed  and  now  proposes 
to  obtain  relief  by  the  extraordinary  measure  of  offering  for  sale  in  Europe 
at  public  auction  no  less  than  24,000  square  leagues  of  land  in  their  recently 
organized  territories  at  a  minimum  price  of  $2  in  gold  per  hectare,  or  about 
$1.2-5  per  acre.  These  lands,  according  to  the  Buenos  Ayres  Herald,  are  situ- 
ated in  Terra  del  Fuego,  or  in  territories  where  the  best  lands  have  already 
been  disposed  of  in  large  tracts,  or  where  only  swamp  lands  remain  unsold, 
and  would  not  attract  eager  bidders  among  foreigners. 

From  this  desperate  measure  they  hoped  to  have  raised  $120,000,000  of  gold 
to  be  deposited.in  the  mint  for  the  conver.sion  of  the  Argentine  national-bank 
notes.  The  emergency  it  appears  was  great,  but  it  is  very  likely  gray  hairs 
will  cover  the  heads  of  the  holders  of  these  notes  long  before  the  notes  will 
be  redeemed  either  in  gold  or  silver. 

Referring  to  the  scheme  of  the  notorious  John  Law,  to  which 
Senator  Morrill  refers  in  this  report,  Thomas  Jefferson  once  said, 
in  a  letter  written  by  him  at  Monticello  in  1813,  that  it — 

ended  in  France  in  the  bankruptcy  of  the  public  treasury,  the  crush  of  thou- 
sands and  thousands  of  private  fortunes,  and  scenes  of  desolation  and  distress 
equal  to  those  of  an  invading  army  burning  and  laying  waste  all  before  it. 
1829 


13 

THE  MONEY  OF  THE  CONSTITUTION. 

We  frequently  hear  men  declare  their  undying  allegiance  to  "the 
money  of  the  Constitution."  I  shall  not  be  personal.  I  have  no 
other  aim  than  the  preservation  of  vv^hat  seems  to  me  the  correct 
principle  as  applicable  to  this  question.  But  there  are  those,  I 
repeat,  who  contend  for  the  money  of  the  Constitution  and  at  the 
same  time  support  a  money  unknov\^n  to  the  Constitution,  denied 
by  the  Constitution,  and  despised  by  its  founders. 

Here  is  my  good  friend  from  Alabama,  General  Wheeler,  serv- 
ing notice  on  me  that  a  Democratic  Congress  passed  the  law  of 
1878  to  prevent  the  retirement  of  these  notes,  as  if  that  were  an 
authority  against  my  present  position  or  illustrative  of  Democratic 
principles. 

Gentlemen  must  remember  the  conditions  that  prevailed  at  the 
time  that  act  was  passed.  We  were  then  just  on  the  eve  of  com- 
ing to  a  specie  basis.  We  had  passed  practically  through  the  era 
of  contraction,  but  we  had  not  yet  obtained  a  fair  share  of  metal- 
lic money.  The  Treasury  statement  for  that  year  shows  that  we 
had  in  circulation  only  $805,793,807,  as  follows: 


[n  cii-ciilation 
Mar.  1, 1878. 


Gold  coin 

Standard  silver  dollars. 

Subsidiary  silver 

Gold  certificates 

Silver  certificates 

United  States  notes 

National-bank  notes 


83,530,163 


53,573,833 
44,364,100 


311,436,971 
313, 888, 740 


Total. 


805,793,807 


From  this  table  it  will  be  seen  that  we  then  had  no  silver  dol- 
lars and  very  little  gold  in  circulation.  It  is  a  singular  coin- 
cidence that  the  Bland- Allison  Act  was  passed  this  same  year. 
In  view  of  all  the  vicissitudes  of  our  financial  affairs,  it  seems 
clear  to  me  that  it  would  have  simplified  matters  very  much  and 
probably  afforded  a  happy  solution  of  most,  if  not  all,  of  our 
troubles  if  when  the  silver  coins  were  issued  under  the  Bland  law 
of  1878  it  had  been  provided  that  for  each  dollar  so  issued  a  dollar  in 
paper  promises  should  be  retired.  Our  stock  of  silver  and  gold, 
both  of  coin  and  bullion,  is  now  about  $1,300,000,000.  or  $500,000,- 
000  more  than  all  the  money  in  circulation  of  every  kind  in  1878. 

I  am  aware,  Mr.  Chairman,  that  the  advocacy  of  this  law  to 
prevent  the  further  retirement  of  the  greenback  was  taken  by 
many  as  a  pledge  of  the  party  to  Government  paper  money.  It 
seemed  for  the  time  to  promise  well  for  the  party.  It  was  sup- 
posed by  some  to  be  a  necessary  remedy  suitable  only  to  the  then 
distressed  condition  of  the  country.  It  was  opposed  then  by  some 
of  our  ablest  Democratic  leaders,  and  the  dangers  of  the  move- 
ment clearly  pointed  out.  But  we  should  not  follow  as  a  prece- 
dent that  which  was  done  as  an  exception  to,  and  recognized  as 
a  departure  from,  sound  Democratic  principles. 

I  realize  that  we  have  honest  differences  among  us  upon  this 
subject,  differences  which  seei^i  to  be  irreconcilable;  but,  Mr. 
Chairman,  there  will  be  a  revisiftn  of  views,  a  codification  of  doc- 
trines, and  a  unification  of  the  faith.  Whatever  shades  of  opinion 
may  divide  us,  whatever  local  influences  may  give /"olor  to  our  con- 
victions or  promjit  our  actions,  whatever  of  pride  or  resentment 
1829 


14 

growing  out  of  our  struggles  over  this  question  may  now  be  felt, 
they  will  all  pass  away;  and  when  that  time  comes,  as  it  must 
come,  our  party  will  be  found  standing  by  the  Constitution,  fol- 
lowing the  teachings  and  abiding  in  the  faith  of  the  fathers. 

THE  COINAGE  OF  THE  CONSTITUTION. 

Mr.  Chairman,  it  is  not  uncommon  to  hear  gentlemen  declare 
that  they  are  for  the  coinage  of  the  Constitution.  We  hear  this 
most  frequently  from  those  who  insist  upon  the  free  and  unlimited 
coinage  of  silver  at  the  ratio  of  10  to  1.  They  seem  to  think  the 
one  thing  alone  which  will  answer  the  demands  of  the  Constitution 
will  be  free  coinage  at  16  to  1.  What  was  the  coinage  of  the  Con- 
stitution? 

There  are  but  two  references  in  that  instrument  to  this  subject. 
Section  8  of  Article  I  declares  that — 

Congress  shall  have  power  *  *  *  to  coin  mone3r,  regulate  the  value 
thereof,  and  of  foreign  coin,  and  fix  the  standard  of  weights  and  measures. 

Section  10  of  the  same  article  declares — 

that  no  State  shall  coin  money,  emit  bills  of  credit,  make  anything  but  gold 
and  silver  coin  a  tender  in  payment  of  debts. 

There  is  no  suggestion  of  ratios  in  either  of  these  provisions,  ex- 
cept in  "regulate  the  value."  No  ratio  was  named,  no  mint  was 
in  existence,  no  coinage  laws  or  precedents  were  recognized  or 
adopted  or  sanctioned.  Congress  was  simply  given  the  power  to 
coin  money  and  regulate  the  value  of  that  coin. 

What  was  meant  by  the  word  regulate  as  used  in  that  connec- 
tion? Was  it  to  declare  arbitrarily  a  value  not  found  to  exist  in 
the  coin?  The  Congress  should  fix  the  standard  of  weights  and 
measures.  This  was  to  be  an  act  arbitrary  in  its  nature,  but  Ctm- 
gress  could  not  under  this  grant  of  power  fix  values  where  they  did 
not  exist.  Necessarily  this  language  means  that  after  establishing 
a  Tinit  of  value  and  providing  for  various  denominations  both  of 
gold  and  silver  it  was  left  with  Congress  to  ascertain  and  declare 
the  relation  which  the  one  metal  shall  sustain  to  the  other  in  the 
coinage,  viz,  how  much  gold  shall  be  in  the  one  and  how  much 
silver  shall  be  in  the  other  to  make  the  dollars  equal.  But  in  ad- 
dition to  this  the  word  "  regulate  "  has  in  it  the  idea  of  continuous 
action,  of  supervision.  The  relative  value  of  gold  and  silver  had 
been  constantly  changing  since  the  dawn  of  history. 

It  is  said  that  in  ancient  Egypt  they  were  of  equal  value,  or  a 
ratio  of  1  to  1.  Among  the  Greeks  and  Romans  the  ratio  was  9 
to  1.  It  never  ran  to  12  to  1  until  in  tlie  seventeenth  century. 
The  men  who  wrote  this  Constitutifni  knew  the  use  of  language, 
and  they  knew  that  the  relative  value  of  these  metals  was  con- 
stantly changing,  and  that  it  was  not  even  uniform  among  the 
nations,  and  so  they  provided  a  power  to  regulate.  If  we  had 
any  doubt  on  this  subject  only  a  slight  investigation  of  the  dis- 
cussion which  led  up  to  the  first  ratio  under  the  Constitution 
would  remove  that  doubt. 

Mr.  Jefferson  says  in  his  autobiography  that  some  difference  of 
oi)inion  arose  as  to  the  monetary  system  which  should  be  adopted. 
The  financier,  Robert  Morris,  had  sulnnitted  to  Congress,  in  1783, 
a  very  comiilicated  and  cumbersome  system,  in  whicli  the  value  of 
a  dollar  was  to  be  expressed  by  1.440  units.  Jefferson  tells  us  that 
he  replied  to  this  and  printed  his  notes,  and,  putting  them  into 
the  hands  of  members  of  Congress  for  consideration,  that  the 
committee  agi'eed  to  report  on  his  principle,  and  he  adds:  "  This 
was  adopted  the  ensuing  year  and  is  the  system  which  now  pre- 
1829 


15 

vails."  These  notes  appear  in  Ms  published  works  under  the 
heading,  "Notes  on  the  establishment  of  a  money  tinit  and  of  a 
coinage  for  the  United  States."  I  will  quote  his  very  langiiage  on 
this  question.  It  will  be  found  on  page  168,  volume  1,  and  reads 
as  follows: 

The  proportion  between  the  vahies  of  gold  and  silver  is  a  mercantile  prob- 
lem altogether.  It  would  be  inaccurate  to  fix  it  by  the  popular  exchanges 
of  a  half  joe  for  $8,  a  louis  for  4  French  crowns,  or  5  louis  for  S~3.  The 
first  of  these  would  be  to  adopt  the  Spanish  proportion  between  gold  and  sil- 
ver; the  second,  the  French:  the  third,  a  mere  popular  barter,  wherein  con- 
venience is  consulted  more  than  accuracy.  The  legal  proportion  in  Spain  is 
If)  for  1;  in  England  15.V  for  1;  in  France  15  for  1.  The  Spaniards  and  English, 
are  found,  in  experience,  to  retain  an  overproportion  of  gold  coins,  and  to 
loose  theii'  silver. 

The  French  have  a  greater  proportion  of  silver.  The  difference  at  market 
has  been  on  the  decrease.  The  Financier  states  it  at  present  as  at  14J  for  1. 
Just  principles  will  lead  us  to  disregard  legal  proportions  altogether;  to  in- 
quire into  the  market  price  of  gold  in  the  several  countries  with  which  we 
shall  principally  be  connected  in  commerce,  and  to  take  an  average  from 
them.  Perhaps  we  might,  with  safety,  lean  to  a  proportion  somewhat  above 
par  for  gold,  considering  our  neighborhood  and  commerce  with  the  sources 
of  the  coins,  and  the  tendency  which  the  high  price  of  gold  in  Spain  has,  to 
draw  thither  all  that  of  their  mines,  leaving  silver  principally  for  our  and 
other  markets.  It  is  not  impossible  that  15  for  1  may  be  found  an  eligible  pro- 
portion.   I  state  it,  however,  as  a  conjecture  only. 

Now,  jvLst  think  of  it,  Mr.  Chairman;  here  are  the  utterances 
of  the  very  man  who  prepared,  proposed,  and  secured  the  adop- 
tion of  our  coinage  system.  He  tells  us  that  the  proportion  be- 
tween the  metals  is  a  mercantile  problem  altogether,  and  that 
"  just  principles  would  lead  us  to  disregard  legal  proportions  alto- 
gether." That  we  "might lean  with  safety  to  a  i^roportion  some- 
what above  par  for  gold." 

The  ratio  actiially  adopted  was  15  to  1.  If  there  is  any  coinage 
of  the  Constitution  it  is  coinage  at  the  ratio  of  15  to  1,  or  at  some 
ratio  which  expresses  the  values  of  gold  and  silver  in  the  mercan- 
tile world.  The  first  might  historically  be  called  the  ratio  of  the 
Constitution,  because  it  was  the  first  established  under  the  Consti- 
tution. The  second  might  be  called  a  constitutional  coinage  be- 
cause the  spirit  of  the  system  as  declared  by  its  author  was  one 
based  on  relative  commercial  values.  But,  Mr.  Chairman,  the 
ratio  of  16  to  1  has  neither  claim  to  its  credit. 

As  I  have  said,  the  power  to  regulate  contained  the  idea  of  su- 
pervision. This  power  we  have  exercised.  The  first  ratio  was  15 
to  1.  Under  this  ratio  we  lost  all  of  our  gold  because  we  had 
undervalued  it.  A  bill  to  change  the  ratio  was  proposed  in  1834, 
the  object  being  to  procure  gold  in  circulation.  Benton  was  the 
great  champion  of  the  movement.  He  demanded  that  "  the  mint 
drops  should  shine  in  the  purses  of  the  poor."  He  submitted  a  set 
of  resolutions  in  the  Senate,  calling  for  a  joint  committee  of  T^oth 
Houses  to  inquire  into  the  cause  or  causes  of  our  loss  of  the  yellow 
metal. 

A  bill  was  finally  introduced  which  changed  the  ratio  to  16  to  1. 
It  passed  both  Houses  and  received  the  signature  of  President 
Jackson.  They  thought  in  those  days  that  it  was  the  commercial 
and  not  the  legal  ratio  that  would  keep  the  metals  in  circulation. 
They  were  hard-money  Democrats,  and  their  fame  rests  largely 
upon  their  loyal  devotion  to  sound-money  principles. 

In  speaking  upon  this  bill  Mr.  Benton  said: 

That  gold  was  undervalued  by  the  laws  of  the  United  States  and  expelled 
from  circulation  was  a  fact  which  everybody  knew;  but  there  was  something 
else  which  everybody  did  not  know;  which  few,  in  reality,  had  an  opportu- 
nity of  knowing,  but  which  was  necessary  to  be  known  to  enable  the  friends 
of  gold  to  go  to  work  at  the  right  place  to  effect  the  recovery  of  that  precious 
metal  which  their  fathers  once  possessed,  which  the  subjects  of  European 


16 

kings  now  jjossess,  which  the  citizens  of  the  young  republics  to  the  south  all 
possess,  which  even  the  free  negroes  of  San  Domingo  possess,  but  which  the 
yeomanry  of  this  America  have  been  deprived  of  for  more  than  twenty  years, 
and  will  "be  deprived  of  forever  unless  they  discover  the  cause  of  the  evil 
and  apply  the  remedy  to  its  root. 

Mr.  Chairman,  it  is  not  my  purpose  to  follow  these  various  ex- 
pressions of  oinnion  with  further  comment.  I  prefer  to  present 
the  utterances  of  others  rather  than  to  give  my  own.  It  occurred 
to  me  that  possibly  the  weight  of  their  great  names  and  the  clear- 
ness and  strength  of  their  reasons  might  have  more  weight  than 
anything  that  could  be  said  by  the  living. 

Paper  money  based  alone  on  faith  or  mere  authority  is  a  delu- 
sion and  a  snare.  It  is  not  a  new  experiment.  Almost  every  na- 
tion at  some  time  in  its  history,  either  tempted  by  its  necessities 
or  guided  by  unwise  counsels,  has  pursued  this  phantom,  but 
each  in  turn  has  been  compelled  to  retrace  its  steps  with  blasted 
hopes  and  bleeding  feet.  Actual  money  may  not  always  be  needed, 
and,  in  fact,  comparatively  speaking,  is  little  used  in  the  larger 
fields  of  commerce  and  trade;  but  whatever  takes  its  place  must, 
like  warehoiise  receipts,  represent  and  entitle  the  holder  to  the 
thing  of  real  value. 

I  submit,  therefore,  that  it  is  clearly  established,  both  by  reason 
and  authority — 

First.  That  the  Government  ought  not  to  issue  paper  money; 

Second.  That  there  can  be  no  honest  money  without  value — 
actual  commercial  value — equal  to  that  which  it  purports  and  rep- 
resents itself  to  be; 

Third.  That  the  precious  metals  can  not  be  coined  and  kept  in 
circulation  together  at  a  mere  arbitrary  ratio;  that  is,  without  re- 
gard to  their  respective  commercial  values;  and 

Fourth.  That  the  Democratic  party  from  the  days  of  Jefferson 
in  all  its  history  has  been  and  is  the  hard-money  party  and  the 
honest-money  party  of  the  country. 

To  this  I  will  add  a  hope  and  a  prophecy  that  with  a  worthy, 
able,  and  fearless  successor  to  his  illustrious  predecessors  in  the 
Presidential  chair,  there  is  nothing  which  we  can  do  that  wiU 
strip  our  party  of  the  laurels  won  in  defense  of  these  doctrines  in 
the  past,  nor  reverse  its  policy  for  the  future. 

1829 

o 


THB    CURRENCY. 


SPEECH 


OF 


HON.  NICHOLAS  NICHOLS  COX, 

OF     TENNESSEE, 


HOUSE  OF  REPRESENTATIVES, 


Friday,  January  25,  1895. 


■WJVSHTIMGXON. 

1895. 


SPEECH 

OF 

HON.  NICHOLAS    NICHOLS  COX 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8518)  making  appropriations  for 
sundry  civil  expenses  of  the  Government  for  the  fiscal  year  ending  June  30, 
1890,  and  for  other  purposes — 

Mr.  COX  said: 

Mr.  Chairman:  In  a  discussion  of  so  important  a  matter  I  do 
not  think  that  any  character  of  remarks  at  all  personal  or  partisan 
should  be  indulged  in.  I  do  not  think  that  any  light  will  be  thrown 
on  the  pending  bill  by  charges  and  countercharges  as  to  the  causes 
of  our  troubles  made  by  either  of  the  great  political  parties.  We 
are  not  now  called  upon  to  discuss  our  errors,  only  so  far  as  they 
may  disclose  a  way  for  substantial  and  speedy  relief.  What  good 
can  be  accomplished  by  abuse  and  unfriendly  criticisms  I  am  un- 
able to  see. 

If  the  honorable  gentleman  from  Pennsylvania  [Mr.  Sibley]  , 
who  has  just  spoken,  has  information,  as  he  says  he  has,  by  the 
confessions  of  a  member  of  this  body  that  he  sold  his  vote  to  se- 
cure an  appointment  from  the  President,  and  the  President  be- 
stowed an  appointment  for  a  vote,  then  that  member  should  be 
exposed  and  the  gentleman  have  him  expelled.  I  have  too  much 
confidence  in  every  member  of  this  body  to  entertain  for  a  mo- 
ment such  a  thought,  and  too  much  esteem  for  any  President, 
without  regard  to  party,  to  believe  that  that  high  officer  would  be 
so  influenced. 

When  the  gentleman  further  says  that  members  have  had  golden 
locks  put  on  their  mouths,  ought  he  not  to  name  them?  Is  such 
an  insinuation  or  charge  just  or  proper,  when  he  can  name  no 
one,  nor  prove  the  guilt  of  a  single  man?  I  speak  for  myself ,  that 
since  I  have  been  a  member  of  this  House  I  have  never  seen  or 
heard  anything  that  cast  a  suspicion  on  a  single  man  in  this  body. 
Gold  will  lock  the  gentleman's  mouth,  I  have  no  doubt,  as  soon  as 
it  will  his  equals  here  and  everywhere. 

I  have  my  convictions  as  to  the  caiises  of  our  troubles.  They 
have  been  stated  on  this  floor  in  my  feeble  way.  Biit  shall  we,  as 
representatives  of  our  people,  engage  in  disputes  with  each  other 
and  refuse  to  attempt  to  relieve  our  constituents.  I  leave  all  this 
behind,  and  will  labor  all  I  can  to  restore  to  our  country  that 
prosperity  it  ought  to  enjoy.  I  quarrel  with  no  one,  and  will 
abuse  none. 

Our  financial  officer  stands  as  high  in  statesmanship  as  any  man. 
His  high  reputation  will  not  suffer  from  a  few  blasts  of  words,  de- 
livered in  spite;  and  that  he  is  laboring  with  fidelity  to  duty  in 
1794  3 


this  matter  no  one  doubts,  and  he  is  worthy  of  the  highest  praise; 
that  he  is  working  for  our  people,  believing  his  views  will  help 
them,  no  one  that  knows  his  efforts  questions.  He  comes  to  us, 
he  asks  us  to  help  him  and  hold  up  his  hands  with  the  great 
power  confided  to  us,  so  that  he  may,  if  possible,  relieve  the  peo- 
ple of  their  distress,  and  turn  in  again  sunlight  on  them.  Will  we 
do  it,  or  will  we  leave  him  unaided  and  alone? 

I  speak  for  myself,  and  every  effort  I  can  make,  feeble  as  it  will 
be,  shall  be  done  to  give  relief  to  our  business,  independence  to 
our  Treasury,  and  prosperity  to  our  people. 

The  proposed  bill  is  not  perfect,  and  I  do  not  believe  any  great 
financial  measure  can  at  once  be  formed.  It  must  be  built  up 
with  experience  and  careful  thought,  and  there  can  be  no  doubt 
that  apparently  just  criticism  can  be  made  on  any  plan  proposed; 
but  is  it  not  better  to  try  and  cure  instead  of  sitting  down  com- 
plaining and  doing  nothing? 

THIS  BILL,  IN  CONNECTION  WITH  THE  TREASURY. 

We  all  understand  the  sad  condition  our  financial  system  is  in 
as  it  affects  the  Grovemment.  Our  receipts  of  money  are  below 
our  exx)enses,  and  each  day  adds  to  our  indebtedness.  Now,  we 
believe  that  this  will  not  last  long,  but  the  great  cause  of  this  de- 
ficiency is  not  our  taxing  laws,  but  the  prostration  of  business. 
If  we  can  let  loose  business  and  permit  our  people  to  proceed  un- 
restrained by  vicious  legislation,  it  will  be  but  a  short  time  until 
the  receipts  of  the  Government  will  pay  its  expenses  and  more 
than  pay  them,  and  again  make  the  Government  absolutely  inde- 
pendent of  all  other  financial  powers.  The  banking  features  of 
this  bill  operate  more  directly  on  this  part  of  the  subject. 

The  Secretary  of  the  Treasury  in  his  report  calls  direct  and  em- 
phatic attention  to  another  great  evil  that  is  continually  forcing 
his  finance  in  a  most  unsatisfactory  condition.  About  five  hun- 
dred millions  of  the  notes  of  the  Government  are  out.  They  are 
promises  to  pay  money.  They  are  due  and  owing,  and  no  one  con- 
tests their  validity.  The  people  expect  them  to  be  paid  whenever 
presented.  They  are,  so  to  speak,  checks  on  the  Treasury  of  the 
United  States,  and  the  Secretary  is  charged  by  law  with  their 
payments.  In  order  to  be  ready  so  to  do  he  is  charged  by  law  to 
hold  one  hundred  millions  of  gold  as  a  pledged  fund  for  the  pay- 
ment of  these  notes  or  checks.  He  is  not  only  charged  with  the 
duty  of  paying  them,  but  when  he  pays  them  he  must  again  put 
out  these  promises  and  again  pay  them  when  presented;  an  end- 
less claim  and  a  process  of  obtaining  money  from  the  Treasury 
regardless  of  its  condition  and  regardless  of  the  condition  of  the 
people,  who  must  in  the  end  furnish  the  Treasurer  with  the  money 
to  keep  up  this  process. 

These  notes  are  remarkable  in  another  respect.  They  are  prom- 
ises to  pay  money  and  are  themselves  lawful  money.  Three 
hundred  and  forty-six  millions  of  these  notes  are  legal  tenders 
and  are  as  effectual  in  the  discharge  of  obligations  as  gold;  the 
remainder  of  the  sum,  in  effect,  occupies  exactly  the  same  position. 
You  may  in  the  contract  stipulate  against  receiving  them  in  pay- 
ment, yet  the  holder  can  convert  them  into  gold  at  his  own  option. 

So  you  have  a  legal-tender,  lawful  money,  a  debt-paying  money, 
continually  draining  another  legal-tender,  debt-paying  money 
from  the  vaults  of  the  Government  at  the  will  of  the  holder  of 
these  notes. 

1794 


Mr.  Chairman,  let  me  call  the  attention  of  the  House  to  another 
important  fact  connected  with  these  notes.  They  are  the  most 
desirable  money  we  have.  They  can  pay  a  debt,  and  can  at  any 
time  be  converted  into  gold.  As  a  matter  of  convenience  they 
are  more  desirable  to  hold  than  gold.  There  is  less  risk  in  hold- 
ing them  than  gold  and  they  are  the  great  power  that  at  any 
moment  can  bring  the  Treasury  to  borrowing  and  begging  to  ob- 
tain gold.  They  are  the  great  instrument  through  which  specu- 
lators in  gold,  either  foreign  or  home  gold  gamblers,  can  empty 
our  vaults  regardless  of  the  welfare  of  every  citizen  of  the  United 
States.  These  notes  were  at  one  time  great  favorites  with  our  peo- 
ple. But  now  they  are  gone  from  common  circulation.  You 
hardly  ever  see  one.  They  are  hoarded  and  held,  always  ready  to 
obey  the  gold  gambler  and  gold  speculator. 

Look  what  a  ridiculous  figure  we  displajsed  in  borrowing  gold. 
These  notes  were  taken  out  of  their  hiding  places,  presented  to 
the  Treasiiry  for  gold,  and  then  syndicates  and  speculators  traded 
with  the  people  as  to  how  much  they  must  have  for  their  gold 
that  had  just  been  drawn  from  their  Treasury.  The  terms  being 
agreed  on,  again  these  notes  assume  the  same  functions  they  had 
before,  and  await  another  opportunity  to  make  another  raid. 

This  proposed  legislation  is  to  make  these  notes  the  basis  of  a 
banking  system  in  place  of  United  States  bonds.  Each  bank  op- 
erating under  this  bill  is  to  deposit  with  the  Treasurer  30  per  cent 
of  its  circulation  in  these  securities,  and  if  necessary  use  the  same 
for  redemption  of  the  notes  of  the  bank  if  it  becomes  insolvent. 
If  the  plan  of  the  Secretary  succeeds  it  wotild  in  a  few  years  dis- 
pose of  so  many  of  these  notes  that  the  remainder  could  not 
threaten  the  Treasiiry  or  stand  as  a  menace  to  its  successful  op- 
erations. I  know  this  is  not  an  extinguishment  of  the  paper,  but 
holds  it  in  check  and  converts  it  into  a  use  bonds  are  now  per- 
forming, these  bonds  in  no  way  interrupting  the  business  of  the 
Treasury.  Is  this  not  wise  in  view  of  what  we  see  every  day? 
No  man  can  manage  successfully  our  financial  system  so  long  as 
five  hundred  millions  of  our  obligations  have  a  mortgage  on  every 
dollar  of  gold  that  reaches  our  vaults,  and  an  interminable  mort- 
gage that  is  never  satisfied. 

We  all  recognize  something  must  be  done.  This  great  country 
can  not  and  ought  not  to  be  disturbed  in  its  financial  operations 
by  every  order  for  gold  that  may  be  sent  from  other  nations,  and 
it  is  more  humilitating  that  it  should  be  disturbed  by  money 
traders  and  shylocks  of  our  own  country. 

IS  IT  PRACTICABLE? 

Mr.  Chairman,  we  must  not  forget  that  we  have  to  do  one  of 
two  things.  We  must  get  these  notes  under  our  control,  either  by 
paying  them  at  once,  or  place  them  where  we  can  control  them 
without  prejudice  or  wrong  to  the  holders  until  our  condition  is 
such  that  we  can  pay  and  discharge  them  and  then  destroy  them. 
No  one  is  so  blind  as  not  to  recognize  the  disturbed  conditions  of 
our  finance  and  our  business.  Our  revenues  will  certainly  in- 
crease if  our  business  is  made  prosperous.  So  we  are  dealing  with 
a  state  of  facts  that  exist  now.  Our  banking  system  must  be 
changed  in  a  few  years,  or  abolished,  and  any  delay  is  dangerous. 
Now,  if  we  can  make  this  a  success,  does  not  the  highest  sense 
of  duty  demand  immediate  action? 

If  we  decide  to  raise  money  and  pay  the  notes,  and  cancel  them 
17M 


6 

when  paid,  we  must  first  get  the  money  to  do  so;  and  this  money 
must  be  gold,  as  the  construction  of  law  is  now.  We  can  get  it 
but  one  way.  and  that  is  to  borrow  it  at  the  lowest  rate  of  interest 
possible.  We  issue  our  bonus,  say,  to  run  for  twenty  years  at 
even  3  per  cent.  That  increases  our  bonded  indebtedness  to  the 
extent  of  the  notes.  Assume  that  they  do  not  exceed  four  hundred 
and  fifty  millions  and  that  the  interest  is  paid  quarterly,  or  even 
semiannually,  you  have  paid  at  the  end  of  the  twenty  years  two 
himcb-ed  and  seventy  millions  in  interest;  more  than  half  the  ex- 
isting notes.  You  have  at  the  same  time  reduced  your  volume  of 
circulation  foiir  hundred  and  fifty  millions. 

Every  year  your  money  becomes  less,  your  debt  running,  draw- 
ing interest  on  that  which  at  present  draws  no  interest,  becoming 
larger.  It  does  not  seem  to  me  you  are  strengthening  you  finan- 
cial standing  bj^  goingjin  debt.  I  am  sure  it  has  an  opposite  ef- 
fect with  an  individual.  You  pay  seven  hundred  and  twenty  mil- 
lions for  a  debt  of  four  hundred  and  fifty.  You  miist  under  this 
plan  provide  a  fimd  each  year  to  be  ready  to  pay  the  bonds,  tlius 
drawing  from  the  money  of  the  country  each  year  that  which  the 
people  so  much  need  in  their  own  business;  and  as  you  do  this  you 
increase  the  difficulties  in  obtaining  the  money  to  meet  these  obli- 
gations. To  my  mind  there  could  be  but  one  excuse  for  such  a 
course  as  this,  and  that  excuse  only  should  be  self-preservation. 
We  are  in  no  such  trouble  as  that. 

An  objection  has  been  urged  that  these  notes  would  go  to  a  pre- 
mium, and  could  not  be  procured  for  banking  purposes.  While 
I  do  not  have  the  least  fear  of  such  a  result,  yet  a  slight  amend- 
ment in  the  bill  authorizing  the  Secretary  to  accept  other  lawful 
money,  at  his  discretion,  to  bank  on,  places  this  point  beyond  de- 
bate. 

This  system  places  back  into  circulation  every  dollar  that  is 
taken  out.  True,  it  is  not  exactly  the  same  character  of  paper, 
but  it  is  a  paper  dollar  redeemable  in  lawful  money  at  the  option 
of  the  holder — not  by  the  Government,  but  by  the  bank  that 
gets  the  benefits  of  putting  it  in  circulation.  This  in  no  way 
ever  touches  the  Government  so  long  as  redemption  by  the  bank 
is  maintained.  There  are  no  bonds  bearing  interest  issued;  in- 
deed, the  obligations  of  the  Government  are  lessened  when  com- 
pared with  the  present  system  of  banking. 

But  it  is  argued  that  the  plan  is  impracticable,  for  the  reason 
that  no  one  will  bank  under  it.  Of  course  if  the  scheme  can  not 
be  put  into  operation  we  are  where  we  commenced.  It  will  be  a 
dead  statute  and  no  relief  obtained.  This  objection  addresses 
itself  to  the  citizens  who  wish  to  bank,  and  the  first  question  will 
be  as  to  the  profits  of  the  busmess.  If  the  proposed  legislation 
offers  equal  opportunities  for  profits  as  compared  with  the  present 
system,  and  imposes  no  more  obligations  or  labor,  then  there  will 
hardly  be  any  objections  to  entering  on  the  new  plan.  So  far  as 
that  branch  of  the  business  which  relates  to  depositors,  evidently 
the  advantage,  if  any,  is  with  the  new  system.  I  believe  how- 
ever, this  will  in  practice  amount  substantially  to  the  same,  but 
we  can  make  that  safe  by  amendment. 

Now,  so  far  as  obtaining  and  issuing  notes  as  a  means  of  mak- 
ing profits,  I  think  I  can  clearly  show  the  proposed  system  is  su- 
perior, and  superior  not  only  to  the  bank  but  to  the  patrons  of  the 
bank.  If  the  notes  of  the  bank  are  regarded  as  useful  in  making 
1794 


profits,  then  the  more  the  bank  can  get  (always  assuming  they  are 
good)  on  the  amotmt  of  money  invested,  certainly  the  facilities  for 
profits  are  greater.  The  plain  reason  why  banks  now  do  not  want 
to  issue  their  notes  is  from  the  fact  that  it  costs  the  bank  too  much 
to  get  them.  Now,  this  proposed  system  affords  the  opportimity 
to  take  oxit  circulation  that  can  be  used  with  profit. 

This  is  a  mere  matter  of  calculation,  and  it  places  in  the  hands 
of  the  bank  a  fiind  which  can  be  issued  or  not  as  the  bank  may 
decide,  and  relieves  it  to  a  great  extent  from  the  uncertainties  which 
attach  to  deposits.  The  bank  is  in  a  certain  sense  its  own  de- 
positor. Having  this  increase  of  circulation,  it  can  lower  its  rate 
of  interest.  Upon  this  point  I  have  no  fears  as  to  the  course  of 
banks  that  need  more  circulation.  Just  in  this  connection  let  me 
say  that  this  opportunity  to  banks  to  obtain  circialation,  in  my 
juclgment,  gives  birth  to  a  large  amount  of  opposition  from  the 
great  money  centers  that  have  an  overabundance  of  money,  as  it 
creates  an  opposition  to  them  and  destroys  greatly  their  monopoly 
in  the  use  of  the  circulating  mediiim. 

Just  here,  Mr.  Chairman,  may  I  not  connect  another  idea  that 
has  been  advanced  to  show  how  contradictory  are  the  positions  of 
our  opponents.  This  idea  is  that  such  an  opportunity  is  given 
the  banks  to  take  out  circulation  that  a  ruinous  inflation  will 
occur,  while  the  others  contend  that  none  will  be  taken  out,  as 
the  banks  will  not  accept  what  is  offered.  Now.  below  these  con- 
flicting t^ieories  lies  the  truth.  No  bank  that  is  bound  by  per- 
sonal oaths,  and  with  its  entire  assets  and  personal  liability 
pledged  and  bound  to  redeem  its  notes  at  its  own  counter,  will 
put  them  in  circulation  for  mere  exi)eriment.  It  will  be  the  de- 
mand of  its  customers  that  controls  this,  and  when  the  demand  is 
such  that  a  fair  compensation  can  be  realized  by  the  bank  in  is- 
suing its  notes  they  will  go,  and  when  they  cease  to  be  remuner- 
ative the  whole  interest  of  the  bank  is  centered  in  having  them  in 
its  vaults. 

In  this  line  lies  the  whole  idea  of  elasticity.  The  expansion  is 
created  by  the  demands  of  business,  the  contraction  is  from  the 
same  identical  cause.  No  combination  to  make  currency  scarce 
or  plentiful  will  ever  be  made  between  the  banks  unless  banks  are 
so  foolish  as  to  surrender  the  rights  thej'  have  to  make  reasonable 
profits.  That  is  not  likely  to  occur.  Banks  are  not  so  sentimental. 
Each  bank  looks  to  its  own  interest  and  uses  its  own  opportunities, 
not  for  oppression  of  its  customers  but  for  reasonable  profits. 

As  to  the  expenses  in  the  way  of  taxation  under  the  proposed 
system,  including  the  amount  to  be  paid  for  the  safety  fund,  they 
are  reduced  exactly  one-half.  So  again  the  practicability  is  dem- 
onstrated and  currency  provided  for  the  great  business  of  a  great 
country. 

Mr.  Chairman,  if  I  have  been  able  to  demonstrate  the  great  ad- 
vantages and  good  that  will  result  to  the  Government,  then  that 
good  is  for  the  whole  people  and  all  alike  receive  the  benefits.  If 
I  have  been  able  to  show  that  a  legitimate  banking  business  can 
and  will  be  conducted  under  the  proposed  legislation,  not  only 
conferring  great  benefits  to  all  the  people,  but  benefits  in  locali- 
ties where  most  needed,  then  my  support  of  the  measure  is  free 
and  cordial. 

There  remains,  however,  another  recommendation  that  is  to  me 
of  great  value,  not  only  as  it  affects  the  Government  in  its  finance, 

1794 


8 

but  as  it  affects  the  people  in  their  business — that  every  bank 
shall  redeem  its  own  notes  in  lawful  money,  without  the  inter- 
vention of  the  Government.  The  notes  of  a  corporation  should 
not  be  more  sacred  than  those  of  an  individual.  Tliis  certainly 
is  true  when  the  corporation  has  the  valuable  franchise  of  using 
its  notes  as  money.  It  thus  far  alienates  the  Grovernnient  from 
banking,  and  draws  it  that  much  nearer  to  its  proper  functions. 
It  forces  each  bank  to  preserve  its  own  financial  character,  and  at 
the  same  time  gives  to  it  the  power  to  enlarge  its  issue  as  needed, 
or  contract  when  not  needed,  being  responsible  directly  and  im- 
mediately to  its  own  customers  in  its  own  locality.  The  Secre- 
tary vidth  great  force  emphasized  this  very  important  departure 
from  the  present  system. 

SOME  OBJECTIONS  ANSWERED. 

I  am  met  by  the  proposition  that  this  proposed  measure  is  not 
democratic  and  is  a  perpetuation  of  the  national-bank  system.  I 
do  not  hesitate  to  say  that  if  this  was  a  system  being  proposed  for 
the  first  time  I  should  not  support  it.  But  that  is  not  the  question 
before  us.  We  have  a  system  that  in  vital  points  has  proved  de- 
fective. Banking  has  become  so  interwoven  in  our  business  that 
you  can  as  easily  dispense  with  railroads  as  banks,  and  certainly 
it  is  more  important  to  cui-e  defects  within  our  reach  than  to 
complain  about  matters  we  can  not  remedy. 

What  are  you  going  to  do?  You  can  not  destroy  the  system. 
You  can  not  satisfy  our  people  by  sitting  quietly  down  and  doing 
nothing.  Our  promises  are  made,  our  duty  is  plain,  and  I  appeal 
to  my  party  friends  to  redeem  their  promises,  exert  their  talents, 
and  be  a  living,  moving  power,  capable  to  legislate  and  brave 
enough  to  execute.     [Applause.] 

And  another  objection  is  that  the  depositor  is  deprived  of  certain 
securities  which  he  now  has  under  existing  law.  I  admit  there  is 
force  on  this  point;  but  that  can  easily  be  remedied  by  an  amend- 
ment that  does  not  in  the  least  destroy  the  symmetry  of  the  bill, 
and  I  see  no  reason  why  we  should  not  go  forward  and  perfect 
the  biU,  instead  of  trjdng  to  destroy  it,  and  in  our  vote  say  we  will 
not  even  consider  this  most  important  and  vital  subject.  If  we 
shall  decide  that  we  will  have  nothing  to  do  with  it,  may  not  our 
constituents  very  well  decide  that  they  will  have  nothing  to  do 
with  us?  Is  nonaction  to  be  our  course,  and  allow  the  opportunity 
presented  to  us  to  pass?  Is  our  party  so  utterly  unconcious  of 
our  obligations  as  to  become  dead  to  the  demands  of  our  constitu- 
ents?   I  hope  not. 

This  brings  me  to  the  other  subject  embraced  in  this  bill,  and 
to  my  mind  one  of  the  most  important  features  connected  with  it. 

STATE  BANKS. 

At  the  last  session  of  Congress  this  subject  went  under  thorough 
discussion,  and  the  House  indulged  me  then  in  a  discussion  of  the 
proposition  to  such  an  extent  that  I  do  not  now  wish  to  take  but  a 
short  time  in  reference  to  this  matter.  The  proposition  now  by  thia 
bill  is  materially  changed  from  what  it  was.  This  bill  recognizes  the 
authority  of  the  Government  to  exercise  its  taxing  power  on  State- 
bank  circulation,  and  limits  such  taxing  power  to  the  exercise  of 
the  same  on  certain  conditions.  It  will  be  conceded  readily  that 
if  the  power  exists,  then  the  same  may  be  exercised  or  not  upon  the 
compliance  or  noncompliance  vnth  certain  limitations  and  re- 

1794 


9 

strictions  named  in  the  law.  These  limitations  can  certainly  be 
prescribed,  if  it  is  conceded  the  general  power  exists.  The  greater 
includes  the  smaller.  These  limitations  have  but  one  object  in 
view  and  that  is  to  make  certain  the  redemption  of  the  notes  issued 
by  State  organizations.  Their  solvency  is  assured  by  the  restric- 
tions interposed  and  their  final  redemption  in  lawful  money  ren- 
dered certain. 

Thirty  per  cent  of  their  circulation  must  be  deposited  in  legal- 
tender  notes,  just  as  is  provided  for  national  banks.  A  first  lien 
is  also  given  on  the  assets  of  the  bank,  to  make  sure  their  notes, 
and  then  the  liability  of  stockholders  equivalent  to  their  stock  is 
also  secured.  These  conditions  precede  the  issuance  of  any  notes, 
and  must  affirmatively  appear  before  the  tax  can  be  released. 

Not  a  single  gentleman  who  was  examined  before  the  committee 
but  admitted  that  no  danger  could  arise  as  to  the  ultimate  or 
speedy  redemption  of  such  notes,  some  of  these  gentlemen  stat- 
ing that  more  security  for  the  redemption  of  the  notes  was  re- 
quired than  necessary. 

It  will  be  seen  that  these  limitations  and  restrictions  are  pre- 
scribed before  the  bank  can  issue  a  note.  And  the  Secretary  of 
the  Treasury  and  Comptroller  of  the  Currency  ascertain  and 
officially  announce  that  the  bank  has  placed  itself  in  a  position  to 
be  excused  and  liberated  from  the  tax  on  its  circulating  notes. 

After  the  bank  has  issued  its  notes  the  restrictions  of  the  Gov- 
ernment are  not  removed,  but  are  held  to  force  the  bank  to  keep 
good  its  notes.  If  it  should  fraudulently  attempt  to  put  in  circu- 
lation more  notes  than  it  had  authority  to  issue,  the  tax  attaches 
to  the  whole,  and  would  in  its  enforcement  close  the  bank.  If  it 
should  permit  its  capital  stock  to  become  impaired  it  must  make 
it  good  in  thirty  days  or  its  doors  are  closed  by  collecting  the  tax. 
While  there  is  no  examiner  of  these  banks  appointed  by  the  Gov- 
ernment to  inspect  them,  yet  there  is  an  inspection,  and  a  most 
effective  one,  in  the  United  States  officer  engaged  in  collecting  the 
taxes.  The  same  power  is  at  work  that  seizes  the  unlawful  dis- 
tillery, that  watches  and  collects  the  income  tax  and  the  various 
taxes  due  to  the  Government.  No  man  or  set  of  men  with  any 
business  sense  would  ever  undertake  to  violate  the  law  and  their 
oaths,  with  a  certainty  of  detection,  for  an  experiment  that  could 
not  possibly  be  of  any  benefit  to  them. 

But  anyone  who  speaks  against  these  banks  brings  up  the  state 
of  things  that  existed  before  the  war,  and  it  seems  to  frighten 
men,  and  they  charge  we  are  trying  to  rush  in  on  a  currency  sys- 
tem that  would  be  utterly  unreliable.  They  seem  to  think  that 
whatever  progress  we  have  made  in  other  matters,  we  have  been 
at  a  standstill  in  regard  to  finance  and  banking.  They  couple  this 
with  the  statement  that  forty-four  States  could  have  a  circulation 
based  on  different  securities  and  the  holder  of  the  notes  subject 
to  all  kinds  of  troubles  and  loss  in  regard  to  the  same. 

There  is  no  such  scheme  proposed.  All  these  banks  are  under 
the  same  restrictions.  All  must  provide  the  same  securities  for  its 
notes.  All  are  subject  to  same  inspection  and  are  at  all  times  un- 
der the  eye  of  taxing  power  of  the  Government.  But  outside  of 
tiiese  safety  guards  there  are  others  more  effectual  and  can  not  be 
evaded.  Last  May  I  had  the  honor  to  address  the  House  directly 
on  this  question,  and  I  here  repeat  what  I  said  then  on  this  point: 

"There  has  never  existed  in  the  United  States  a  state  of  facts 

1794 


10 

and  circiimstances  like  the  present  when  State-bank  paper  was 
in  circulation.  It  is  well  remembered  that  before  the  war  there 
was  no  paper  circulation  but  State  bank  paper,  and  its  redemp- 
tion was  based  on  gold  and  silver.  At  present  if  loose  legisla- 
tion or  bad  management  in  tlie  bank  was  undertaken — and  it  may 
be — the  notes  of  siich  institutions  would  never  pass  over  its  own 
counters.  They  must  be  regarded  as  good  and  stable  as  national- 
bank  notes  or  Treasury  notes.  They  will  have  to  circulate  side 
by  side  with  them,  and  the  moment  they  are  treated  as  of  less 
value  they  can  never  leave  the  vaults  of  the  bank,  or  if  by  chance 
they  have  left  the  home  bank  and  gone  into  circulation,  and 
they  go  below  the  national  currency,  immediately  they  will  be 
returned  for  redemption. 

' '  This  plain  truth  will  be  known  to  every  business  man  that  at- 
tempts to  put  into  circulation  State-bank  notes.  He  recognizes  at 
the  very  outset  that  these  notes  are  worthless  to  the  bank  unless 
good  and  solvent  and  as  good  as  the  notes  they  have  to  come  into 
competition  with.  He  further  knows  that  iinless  their  character 
is  fully  maintained  equivalent  to  the  national  currency  his  bank 
will  have  to  redeem  them  in  money  which  is  as  good.  No  legisla- 
tive restrictions  could  possibly  be  so  effective,  and  the  bank  issu- 
ing notes  must  occupy  the  position  of  utter  indifference  as  to  the 
use  of  the  State  cii'culation  or  national  circulation,  and  accept  one 
as  readily  as  the  other.  So  whatever  may  be  the  legislation  of  the 
States,  here  is  found  a  law  absolutely  certain  in  its  results  and  re- 
straints. 

"  Biit  let  me  extend  this  idea  further,  and  we  can  see  at  onc« 
the  effective  and  certain  check  on  the  circtilation  of  bad  paper. 

"There  are  in  the  United  States  3,781  national  banks,  including 
all  the  State  banking  institutions  of  different  characters,  of  which 
there  are  5,685,  a  total  of  9,466  banks,  one  bank  to  every  7,000  in- 
habitants. I  do  not  suppose  there  is  one  of  these  banks,  at  least 
very  few,  that  is  not  on  some  line  of  transportation,  either  rail 
or  water.  I  do  not  suppose  that  there  is  a  single  one  that  does 
not  have  telegraph  communications.  Compare  this  for  a  moment 
with  the  conditions  that  existed  in  1840  to  1856,  when  unsound 
and  worthless  banks  existed.  It  was  in  this  period  the  greatest 
disaster  resulted  from  bad  bank  circulation.  If  any  State  insti- 
tution was  to  become  a  bank  of  issue,  each  one  woulci  at  this  time 
operate  as  a  check  on  the  other;  if  ever  the  circulation  of  a  bank 
was  refused  at  one  of  these  institutions  it  would  drive  that  circu- 
lation home  for  redemption. 

"  Nearly  4,000  national  banks  doing  business  with  these  institu- 
tions, with  a  circiilation  beyond  disintte,  would  never  permit  un- 
safe currency  to  float  for  a  day.  It  is  well  understood  the  immen- 
sity of  business  done  by  checks  and  drafts.  Woiild  any  bank, 
State  or  national,  ever  receive  a  dollar  of  doubtful  currency  and 
give  to  the  owner  a  credit  upon  which  he  could  demand  legal- 
tender  money? 

' '  Would  any  solvent  bank  to-day  become  a  debtor  by  accept- 
ing a  check  of  another  unless  the  bank  knew  the  check  to  be 
absolutely  good?  Certainly  not.  Now,  these  notes  issued  are  but 
the  checks  of  the  banks  on  themselves,  and  we  all  remember  what 
great  relief  was  obtained  in  our  financial  troubles  by  the  use  of 
certified  checks  issued  by  banks,  drawn  on  their  own  institutions. 

"But  I  have  no  reason  to  assume  that  any  State  legislature  will 
1794 


u 

license  institutions  to  cheat  and  steal.  It  wotild  be  just  as  reason- 
able to  presume  Congress  would  do  such  a  thing.  The  welfare  of 
every  State  is  substantially  in  the  hands  of  its  legislature,  and  if 
one  legislature  should  by  careless  lavv^s  permit  bad  banking,  if 
such  could  be  done,  in  issuing  bad  paper,  then  that  State  would  be 
the  sufferer,  and  certainly  Congress  is  not  the  guardian  of  State 
legislatures.  But,  Mr.  Chairman,  this  idea  of  States  permitting 
the  issuing  of  bad  currency  is  based  on  the  idea  of  ignorance  in 
the  legislators  and  the  people.  It  assiimes  that  experience  in 
finance,  experience  in  banking,  the  facilities  of  communications, 
and  all  these  combined  have  taught  us  nothing. " 

In  the  financial  troubles  we  are  in,  and  have  been  for  sometime, 
the  per  cent  of  failures  between  the  two  systems  shows  the  State 
banks  in  advance  in  solvency. 

Mr.  Chairman,  there  is  in  the  opposition  to  this  system,  when 
carefully  scrutinized,  somewhat  of  a  selfish  motive.  No  State  can 
force  its  notes  on  anyone.  No  one  need  take  them  that  does  not 
want  them,  and  everybody  can  thoroughly  protect  himself.  Then 
where  is  the  legal  authority  or  tlie  justice  that  confers  on  represent- 
atives of  one  State  the  power  to  manage  the  local  concerns  of  an- 
other State?  If  Texas  is  willing  to  permit  her  people  in  an  organi- 
zation created  by  her  law  to  use  their  credit  with  the  other  citi- 
zen, then  why  should  Maine  say  no,  although  it  may  not  even  af- 
fect a  single  citizen  of  Maine?  Surely  it  can  not  unless  such  a 
citizen  permits  it  at  his  own  choice. 

That  the  national  system  has  not  been  adequate  and  sufficient  is 
demonstrated  by  the  large  number  of  these  State  institutions. 
And  they  have  in  a  great  degree  located  themselves  in  the  rural 
districts  and  smaller  towns,  rendering  excellent  service.  If  they 
have  been  of  universal  benefit,  how  much  more  would  their  use- 
fulness be  increased  if  their  opportiinities  were  enlarged? 

The  great  cities  and  great  manuf  actiu'ing  centers  need  large 
banks  and  large  capital.  The  necessity  does  not  arise  for  such 
large  institutions  in  the  agricultural  districts  or  smaller  towns, 
but  their  needs,  so  far  as  they  extend,  are  to  them  as  imperative 
as  the  greater  industries.  It  is  the  car  load  of  wheat,  hogs,  corn, 
etc. ,  that  make  up  the  gi-eat  distributing  centers.  Will  you  permit 
them  to  utilize  what  they  have  in  legitimate  and  honorable  busi- 
ness, or  circumscribe  their  advantages,  and  year  after  year  drive 
them  to  the  great  money  centers  to  obtain  money  at  fearful  and 
ruinous  rates  of  interest? 

Your  system  has  them  by  the  throat,  and  you  refuse  to  release 
them  or  permit  them  to  escape  from  a  system  that  is  a  disgrace  to 
justice. 

Turn  our  intelligence  loose,  unfetter  it,  and  let  our  energy,  per- 
severance, and  sound  judgment  be  our  guides  and  the  days  of 
idleness  will  soon  disappear.     [Applause.] 
1791 

o 


THE    CURRENCY. 


SPEECH 


Hon.  Nicholas  Nichols  Cox, 


OF     TENNESSEE, 


HOUSE  OF  REPRESENTATIVES, 


Tuesday,  February  5,  1895. 


WASHINGTON. 

1895. 


SPEECH 

OF 

HON.  NICHOLAS  NICHOLS  COX. 


The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.8705)  authorizing  the  Secretary  of 
the  Treasury  to  issue  bonds  to  maintain  the  gold  reserve,  and  to  redeem  and 
retire  United  States  notes,  and  for  other  purposes- 
Mr.  COX  said: 

Mr.  Chairman:  The  committee,  when  we  had  this  matter  under 
discussion  on  a  former  occasion,  kindly  gave  me  all  the  time  I 
asked,  and  1  do  not  think  that  I  would  be  treating  other  members 
with  proper  courtesy  if  I  were  to  consume  much  of  their  time  to- 
day. I  shall  not  attempt  a  discussion  of  the  character  that  has 
been  made  by  the  gentleman  from  Illinois.  Suffice  it  to  say  he 
has  got  on  every  side  of  every  question  connected  with  this  finan- 
cial matter,  and  his  arguments  upon  one  position  are  about  as 
good  as  upon  another.  I  am  at  a  loss  to  see  when  the  question 
comes  up  again  what  kind  of  position  he  will  assume. 

But  I  desire  only  about  fifteen  or  twenty  minutes  of  the  time  of 
the  committee  on  the  points  presented  by  the  two  bills  on  which 
we  will  be  called  to  vote.  The  original  bill,  or  the  bill  advocated 
by  the  gentleman  from  Illinois,  has  got  this  provision  engrafted 
in  it:  That  all  of  the  legal-tender  notes  or  the  greenback  notes,  for 
I  treat  them  in  the  same  class,  that  shall  be  presented  to  the  Treas- 
ury of  the  United  States  for  redemption  shall  be  paid  in  gold,  and 
in  order  to  secure  the  gold  for  that  purpose  that  bonds  of  the 
United  States  shall  be  issued,  running  for  a  period  of  fifty  years, 
I)ayable,  at  the  option  of  the  Grovernment  after  ten  years,  in  gold. 
Now,  let  me  call  attention  to  the  first  important  fact.  There 
never  has  been  a  bond  of  the  United  States  issued  payable  in  gold. 
There  is  no  such  statute  on  our  books,  and  never  in  all  the  history 
of  the  country  has  the  credit  of  the  United  States  been  disturbed 
because  the  bonds  were  payable  in  coin.  This  is  the  first  time  that 
we  have  ever  seriously  considered  the  proposition  to  make  our 
bonds  gold  bonds,  interest  and  principal  payable  only  in  gold. 

We  have  outstanding  now  something  over  six  hundred  millions 
to  be  redeemed  in  1907.  We  have  issiied  one  hundred  millions 
more  within  a  very  short  time  past,  all  of  which  are  payable  in 
coin.  Now,  whenever  you  change  the  obligations  of  the  United 
States  and  issue  another  bond,  a  gold  bond,  of  five  hundred  niil- 
lions"under  this  act,  if  so  much  is  necessary,  you  have,  transferred 
every  obligation  of  the  United  States  of  every  character  into  a 
gold  obligation. 

Now,  whatever  may  be  the  argument  about  the  parity  of  the 
metals  is  not  a  matter  of  importance  here;  but  what  I  say  is  that 
1805  3 


whenever  you  issue  one  bond  of  the  United  States  payable  in  gold 
you  must  assume  every  other  bond  of  the  United  States  as  of  the 
same  quality,  or  you  make  a  difference  between  the  one  obligatif)n 
and  the  other.  That  is  the  first  important  clause,  and  I  hasten 
through  the  two  bills  for  the  piirpose  of  giving  the  committee  what 
is  in  them.  You  can  make  the  comparison  and  your  own  argu- 
ment ui^on  them  better  than  I  can.     I  simply  give  you  the  facts. 

What  is  the  next  proposition?  That  whenever  the  legal-tender 
notes  come  into  the  Treasury  of  the  United  States  for  redemption 
they  will  be  redeemed  in  gold.  But  there  is  a  qualification  there 
that  they  shall  not  be  canceled  under  this  bill  unless  the  banks 
take  out  a  circulation  equivalent  to  the  amount  of  the  canceled 
notes.  Now,  suppose  the  banks  do  not  take  it  out  or  decline  to 
take  it  out.  You  have  the  contraction  of  the  currency  to  the  ex- 
tent of  the  notes  canceled  and  the  w^hole  fal)ric  will  fall  to  the 
groiind  unless  the  banks  give  the  opportunity  for  the  redemption 
in  the  manner  prescribed. 

As  a  member  of  the  committee,  I  enter  my  protest  against  put- 
ting the  circulating  medium  of  the  country  in  the  hands  or  at  the 
control  of  the  national  banks. 

What  is  the  next  proposition?  You  provide  that  the  bonds  shall 
be  paid  in  gold,  but  when  you  come  to  collect  the  customs  duties 
you  strike  out  the  provision  that  any  part  of  that  shall  be  paid  in 
gold.  Now,  I  ask  the  chairman  of  the  committee,  or  any  other 
intelligent  gentleman  here,  how  are  you  going  to  get  the  gold  to 
meet  the  bonds?    Where  is  it  to  come  from? 

Mr.  WILLIAMS  of  Mississippi.     Issue  more  bonds. 

Mr.  COX.  Yes;  borrow  more  gold,  issue  more  bonds,  and  in 
this  way  you  put  this  debt  on  the  country,  and  you  do  this  by 
methods  imknown  in  our  history  heretofore. 

But  there  are  other  provisions  which  are  equally  dangerous.  I 
call  attention  to  these  points  for  the  present,  and  then  pass  to  the 
consideration  of  the  substitute  that  will  be  offered. 

Mr.  FITHIAN.  Will  the  gentleman  point  out  the  objections  to 
the  pending  bill  as  he  progresses? 

j\Ir.  COX.  Well,  I  have  not  time  to  point  out  the  defects  of 
this  bill.     I  can  only  name  some  of  the  objections. 

Mr.  MARSH.     What  substitute  does  my  friend  refer  to? 

Mr.  HAUGEN.     There  will  be  two. 

Mr.  COX.     There  is  but  one  so  far  as  I  am  concerned. 

Mr.  HAUGEN.  There  will  be  two  admissible  by  the  rule. 
You  refer  to  your  own. 

]\Ir.  COX.  '  Now  I  come  to  the  discussion  of  that  question. 
Under  the  Carlisle  bill,  and  all  are  familiar  with  its  provisions,  for 
we  discussed  it  at  length  when  we  were  considering  it,  I  need  not 
state  what  is  proposed.  The  only  material  difference  between  tliat 
bill  and  this  bill  in  regard  to  the  banking  lies  in  one  proposition. 
Now,  keep  in  mind  that  we  are  talking  of  the  bill  as  a  banking 
bill.  That  important  provision  lies  in  this,  that  the  national  banks 
constituted  and  organized  under  the  scheme  proposed  by  the  Sec- 
retary shall  hold  one-half  at  least  of  the  legal-tender  notes,  under 
the  discretion  of  tlie  Treasury  Department,  as  a  part  of  their 
reserves. 

Now.  what  is  the  reason  of  that?  There  is  $1 54.000,000  of  these 
notes  in  the  banks.  If  they  hold  $100,000,000  of  them  as  a  part  of 
their  reserve,  there  is  $100,000,000  of  them  that  is  kept  away  from 

1805 


5 

the  doors  of  the  Treasury.  They  are  the  best  reserves  that  they 
can  have,  becatise  they  are  convertible  into  gold;  and  they  are 
held  now,  and  they  are  all  down  at  the  bottom  of  the  pile.  No 
banking-  man  that  has  sense  enough  to  run  a  bank  pays  out  a 
greenback.  They  are  at  the  bottom,  because  they  are  equivalent 
to  gold,  and  they  are  much  better  for  reserve  for  banks  than  even 
the  gold. 

Now,  this  substitute  retires,  so  to  speak,  $100,000,000  of  these 
notes.  What  is  the  next  proposition  in  the  substitute?  In  the 
banking  system  proposed,  the  banking  on  these  notes  instead  of 
gold  bonds  that  you  propose  to  issue,  it  will  take  $200,000,000  of 
them  as  a  basis  of  circulation.  They  cost  the  people  nothing. 
There  is  nothing  oppressive  in  that  line.  No  interest  accumulates 
upon  them,  and  it  will  require  $300,000,000  of  these  bonds  as  a 
basis  of  this  circulation.  You  have  now  covered,  then,  $300,000,- 
000  of  these  notes.  They  can  raid  the  Treasury  no  more  until  the 
Treasury  arrives  at  the  point  where  the  Treasury  will  raid  them. 

What  is  the  next  proposition  in  the  substitute.  There  is  about 
$124,000,000  of  this  same  character  of  notes  that  is  in  denomina- 
tions of  ones,  twos,  and  fives.  They  are  in  circulation,  and  they 
perform  the  same  function  in  raiding  the  Treasury  as  do  the  large 
notes,  except  they  are  not  so  convenient  for  that.  Now,  the  sub- 
stitute proposes  that  when  these  notes  come  into  the  Treasury, 
either  for  redemption  or  by  collection  of  revenue,  the  moment 
they  are  received  they  are  canceled  by  the  Government  and  forever 
extinguished.  Now,  what  is  proposed  to  supply  their  place?  The 
original  bill  stops  there.  You  would  contract  the  currency  of  the 
land  to  the  extent  of  these  small  notes.  Then  I  say  coin  the  bul- 
lion that  belongs  to  the  Government  of  the  United  States  and  to 
its  people. 

Mr.  TERRY,     How  much  have  you  got? 

Mr.  COX.  There  are  $181,000,000  of  coinage  value  of  coin  and 
bullion.  About  $29,000,000  is  in  dollars  coined,  the  remainder 
in  bullion.  You  can  issue  like  notes  of  like  denomination  for 
these  that  are  canceled,  and  when  you  have  done  that  you  have 
absorbed  $124,000,000  of  the  small  notes  and  have  put  in  their 
places  $124,000,000  of  silver. 

Now,  will  the  committee  pardon  me  one  moment.  What  are  you 
going  to  do  with  this  silver?  There  is  no  silver  certificate  on  a 
dollar  of  that  amount.  Now,  there  are  29.000,000  silver  dollars 
lying  in  the  Treasury  to-day  that  have  not  got  a  certificate  out  on 
them,  and  that  money  is  there,  dead  to  the  iDeople,  as  if  it  were 
buried  in  the  Potomac. 

Mr.  TERRY.  Was  it  uncovered  by  the  redemption  of  the  Sher- 
man notes? 

Mr.  COX.    They  have  paid  the  Sherman  notes  in  gold. 

Mr.  TERRY.     How  did  this  $29,000,000  get  there? 

Mr.  COX,  It  was  coined  out  of  the  bullion  purchased  by  the 
Sherman  notes,  but  when  you  redeemed  the  Sherman  notes,  and 
they  come  in  under  the  original  bill,  this  money  is  left  just  where 
it  is  now. 

Mr.  TERRY.     That  is  what  I  say  is  uncovering  them. 

Mr.  COX.  The  Government  decides  that  it  will  not  pay  them 
in  silver,  nor  will  it  use  its  assets  to  pay  them,  biit  pays  them  in 
gold;  then  Ave  ought  to  have  the  silver  to  help  ourselves. 

Mr.  TERRY.     That  is  what  I  have  been  trying  to  get  out. 

1805 


Mr.  COX.  I  hope  we  have  got  it  out. 
Mr.  TERRY.  I  think  together  we  have  got  it  out. 
Mr.  COX.  Now,  what  is  the  next  propositionV  After  you  have 
got  this  .$124,000,000  of  the  notes  for  redemption,  ones,  twos,  and 
fives,  you  have  got  then  remaining  in  your  Treasury  about  ^oQ,- 
000.000  or  .$60,000,000  more  of  silver.  Why  not  coin  that,  and 
whenever  you  redeem  a  note  that  calls  for  gold,  why  not  cancel  it 
and  use  an  asset  which  the  Government  has  and  whit:h  causes  no 
increase,  but  maintains  your  circulation?  Why  not  do  it?  What 
are  you  going  to  do  with  this  bullion?  Is  this  Congi-ess  going  to 
let  it  lie  tliere?  Are  you  going  to  give  it  away,  throw  it  into  the 
river,  or  coin  it? 

Now,  mark  yooi,  it  will  take  nearly  four  years  to  coin  that  much 
and  put  it  in  circulation;  it  will  use  the  silver,  and  the  silver  vdll 
amount  to  §181,O00.O()O.  and  it  will  not  be  a  drop  in  the  ocean  com- 
pared with  the  circulation  that  we  need.  Under  this  idea  the  sil- 
ver takes  the  place  of  the  canceled  notes,  and  leaves  the  circulat- 
ing mediiam  in  amount  as  it  is  now. 

Now,  I  submit,  Mr.  Chairman,  to  any  intelligent  man  why 
should  this  Government  rush  in  debt  to  the  extent  of  $r)00,000,000 
of  gold  and  refuse  to  utilize  an  asset  of  $181,000,000  that  it  has  of 
its  own.  The  man  who  would  transact  business  that  way  in  my 
country  would  be  jjut  in  the  asylum. 

Mr.  FITHIAN.  Does  yoiir  substitute  provide  for  bonds? 
Mr.  COX.  I  will  come  to  that  as  I  pass  along.  I  want  to  get 
gentlemen  thinking  about  this  matter.  There  is  no  difficulty  in 
it  at  all  if  you  come  down  to  practical  sense.  I  do  pro\ide  for 
bonds  in  my  substitute.  Why?  I  provide  that  the  Seci-etary  of 
the  Treasury  shall  have  full  authority  to  issue  bonds  under  the 
acts  of  1870  and  1S75.  I  do  not  change  their  character.  We  have 
had  those  bonds  and  nobody  has  objected  to  them.  The  reason  I 
])rovide  for  bonds  is  to  put  the  credit  of  this  Government  beyond 
dispute. 

Mr.  FITHIAN.  You  give  the  Secretary  the  same  authority 
that  he  has  now  to  issue  bonds,  but  you  ijroWde  for  a  lower  rate 
of  interest? 

Mr.  COX.  Yes;  I  extend  the  discretion  of  the  Secretary  of  the 
Treasury  to  issue  bonds  for  five  years,  six  years,  ten  j^ears,  or 
fifteen  years,  for  it  will  be  observed  that  as  these  notes  are  can- 
celed or  destroyed  the  necessity  for  Ixmds  will  diminish.  No 
man  can  tell  how  fast  the  notes  will  come  in.  1  give  the  Secre- 
tary discretion  to  issue  these  bonds,  and  the  only  limitation  I  put 
upon  him  is  that  he  shall  not  issue  a  b(jnd  bearing  a  gi'eater  rate 
of  interest  than  4  per  cent. 

Some  gentleman  suggested  to  me  that  the  rate  ought  to  be  8 
per  cent,  but  I  will  tell  you  why  I  make  it  4.     A  short-time  bond 
must  have  a  higher  rate  of  interest.  \\"*iiile  a  long-time  bond  can 
be  placed  at  a  lower  rate.     The  Secretary  has  the  discretion:  he 
is  the  man  who  manages  all  that.     He  issues  these  bonds  just  as 
the  necessity  for  them   arises,  and  the  whole  ciuestion   can  be 
summed  up  in  a  very  few  words.     The  real  question  is:  Will  this 
Congress  vote  to  buy  five  hundred  millions  of  gold  when  they 
can  control  every  dollar  of  these  circulating  notes  by  a  proper 
process  in  their  banking  and  a  proper  process  of  redemption? 
Mr.  CULBERSON.     What  about  the  State  banks? 
Mr.  COX.    I  will  get  to  that  in  a  moment.    There  is  another 
1805 


important  point  to  be  considered,  wliicli  relates  to  the  fact  that 
there  are  certain  localities  in  this  country  that  are  almost  desti- 
tute of  small  change,  and  this  proposition  is  to  coin  as  much  sil- 
ver as  is  necessary  into  siibsidiary  coin  to  supply  those  localities; 
but  when  it  is  coined  into  subsidiary  coin,  that  coin  is  to  be  used, 
jtist  like  the  other,  for  the  extinguishment  of  these  notes  that  give 
us  so  much  troul)le. 

Mr.  HENDRIX.  Will  the  gentleman  permit  a  suggestion  there? 
Does  not  the  gentleman  know  that  there  is  in  the  Treasury  now 
$15,000,000  of  fractional-currency  coin  which  the  Treasury  is  unable 
to  get  into  circulation? 

Mr.  COX.  I  admit  the  fact:  but  there  will  be  none  of  it  coined 
if  it  is  not  needed.  I  leave  that  with  the  Secretary.  It  is  subject 
to  his  discretion.  I  need  not  discuss  a  fact  that  causes  no  troiible. 
If  this  is  not  needed  the  Secretary  will  not  coin  it;  but  if  it  is  needed 
he  will  coin  it.  Now,  I  will  ask  the  gentleman  from  New  York, 
Are  yoii  willing  to  put  your  vote  down  on  the  record  here  to  in- 
crease the  debt  of  the  United  States  $500,000,000  and  leave  that 
silver  lying  there  dead?    I  for  one  will  not  do  it. 

Mr.  FITHIAN.     A  hmidred  and  eighty  millions  of  it. 

Mr.  COX.  Yes;  that  is  its  coinage  valiie,  and  there  is  twenty- 
nine  millions  already  coined  and  locked  Tip. 

Mr.  WILLIAMS  of  Mississippi.  As  a  trust  fund  to  redeem  the 
Sherman  notes;  bvit  they  will  not  use  it. 

Mr.  COX.  Yes;  that  is  what  they  say;  but  I  am  not  going  into 
all  those  details.  My  friend  from  Texas  [Mr.  Culberson]  has 
asked  me  about  the  State  banks. 

Mr.  CULBERSON.  My  question  was  whether  the  State-bank 
proposition  was  incorporated  in  your  substitute. 

Mr.  COX.  It  is.  But  while  I  am  more  devoted,  perhaps,  to  the 
State  banks  than  any  other  man  on  this  floor,  for  I  think  they 
furnish  the  key  that  will  unlock  this  whole  problem,  I  have  nothing 
to  conceal,  and  if  any  friend  of  this  substitute  should  go  to  the 
extent  of  moving  to  strike  oiit  the  State-bank  provision  (which 
can  be  done  without  interfering  with  the  other  features  of  the 
bill),  while  I  will  vote  against  striking  it  out,  I  will  vote  for  the 
substitute  even  with  it  out.  I  know  that  this  measure  will  help 
my  covmtry,  and  I  know  that  the  great  fight  we  have  got  to  meet 
is  to  get  loose  from  these  money  centers. 

Let  me  close  with  one  word.  The  greatest  principle  in  the  sub- 
stitute lies  in  this,  that  every  bank  is  required  to  redeem  its  OAvn 
notes  over  its  own  counter,  and  until  you  provide  for  that  you 
will  never  have  an  elastic  currency;  neither  will  you  ever  have  a 
perfect  banking  system. 

Mr.  Chairman,  I  have  consumed  more  time  than  I  had  intended, 
and  I  now  thank  the  committee,  and  yield  the  rest  of  my  time  to 
the  gentleman  from  Missouri  [Mr.  Hall], 
1805 


THE    CURRENCY   QUI 


SPEECH 


Hon.  JOHN  DAVIS, 


OF     KANSAS, 


HOUSE  OF  REPRESENTATIVES, 


TUESDAY,  JANUARY    8,  1895. 


WASHINGTON. 

1895. 


SPEECH 

OF 

HON.  JOHN  DAVIS 


On  the  bill  (H.  R.  8149)  to  amend  the  laws  relating  to  national  banking  associ- 
ations, to  exemi)t  the  notes  of  State  banks  from  taxation  upon  certain  con- 
ditions, and  for  other  purposes — 

Mr.  DAVIS  said: 

Mr.  Speaker:  In  a  former  session  of  this  Congress  I  discussed 
verj'  fully  the  dangers  of  permitting  the  control  of  the  finances  by 
banking  corporations.  Sir,  the  Constitution  of  the  United  States 
places  the  business  of  coining  and  issuing  money  entirely  in  the 
hands  of  the  General  Government.  The  coining  and  issuing  of 
money  is  an  act  of  sovereignty,  and  to  delegate  the  business  to 
corporations  is  in  that  respect  to  abdicate  government.  The  issu- 
ing of  currency  is  in  no  respect  a  proper  branch  of  the  banking 
business.  It  is,  in  effect,  "  making  money,"  and  it  should  not  be 
performed  by  any  other  power  than  the  sovereign  Government,  as 
mentioned  in  the  Constitution.  The  proposition  that  the  coining 
and  issuing  of  money  is  a  sovereign  act  is  so  plainly  expressed  in 
the  organic  law  that  it  should  not  be  doubted  for  a  moment.  And 
as  to  the  dangers  arising  from  delegating  that  sovereign  power  to 
banking  institutions,  they  are  so  plainly  seen  in  the  history  and 
experiences  of  the  past  that  we  can  not  too  often  recur  to  them. 
The  old  Democratic  platfonns  uniformly  condemned  the  policy  of 
surrendering  the  control  of  the  finances  into  the  hands  of  bank- 
ing corporations.  They  declared  such  a  policy  to  be  "unconsti- 
tutional and  dangerous  to  liberty."  And,  five  times,  at  as  many 
Presidential  elections,  the  people  have  decided  that  the  Demo- 
cratic platforms  were  right. 

Mr.  Speaker,  I  know  it  is  disputed  that  the  language  of  the  Con- 
stitution authorizing  the  General  Government  to  "coin  money" 
and  to  regulate  its  value  applies  to  paper.     It  is  well,  sir,  to  be 

right  in  the  matter,  and  I  appeal  to  the  writers  contemporary  with 
1752  2 


the  Constitution,  and  to  the  very  highest  authorities  to  prove  that 
the  words  "  coining  money"  applies  to  both  metal  and  paper,  and 
to  one  as  truly  as  to  the  other. 

Webster's  Dictionary  admits  that  the  word  "coin"  means  to 
"  stamp,"  and  that  the  act  of  stamping  may  apply  to  either  metal 
or  paper. 

Dr.  Franklin,  discussing  the  sub.iect  of  trade  and  industry,  said: 

As  to  paper  circulating  as  money,  it  is  highly  profitable,  as  its  quick  passing 
from  one  to  another  is  a  gain  of  time,  and  thereby  may  be  understood  to  add 
hands  to  the  comm.unity ;  inasmuch  as  those  who  would  be  employed  in  telling 
and  weighing,  would  follow  other  business.  The  issuers  or  coiners  of  paper 
are  undei'stood  to  have  an  equivalent  to  answer  what  it  is  issued  for  or  valued 
at;  nor  can  any  metal  or  coin  do  more  than  find  its  value. 

•  *  «  «  «  «  * 

Any  paper  in  the  general  chain  of  credit  and  commerce  is  as  useful  as  they 
are;  since  the  issuers  or  coiners  of  that  paper  are  understood  to  have  some 
equivalent  to  answer  for  what  the  paper  is  valued  at;  and  no  metal  or  coin 
can  do  more  than  find  its  value.  Moreover,  as  incontestable  advantages  of 
paper,  we  must  add,  that  the  charge  of  coining  or  making  it  is  by  no  means 
proportionate  to  that  of  coining  of  metals;  nor  is  it  subject  to  waste  by  long 
use  or  impaired  by  adulteration,  sweating,  or  filing.— i*Vanfch'?i's  Works  {lti09), 
volume  4,  pages  166-184. 

Sir  Archibald  Alison,  of  England,  discussing  the  French  finances, 
said: 

In  the  midst  of  the  apparent  prosperity  produced  by  that  excessive  increase 
(of  paper)  the  sagacious  mind  of  Napoleon  perceived  the  seeds  of  future  evil; 
and  amidst  all  the  turmoil  of  his  mUitary  preparations  at  Boulogne,  he  repeat- 
edly wrote  to  the  minister  of  finances  on  the  subject,  and  warned  him  of  the 
danger  of  the  Bank  of  France  trusting  too  far  the  delusive  credit  of  individu  • 
als  engaged  in  extensive  transactions,  or  pushing  to  an  undue  length  in  the 
form  of  a  paper  circulation  the  royal  privileges  of  coining  money.— Alison's 
Etirope,  volume  7,  page  93.    Loudon,  1860. 

Napoleon  Bonaparte,  writing  from  Boulogne,  September  24, 
1805,  said: 

The  evil  originates  in  the  bank  having  transgressed  the  law.  What  has 
the  law  done?  It  has  given  the  privilege  of  coining  money  in  the  form  of 
paper  to  a  particular  company.  *  *  *  In  a  word,  in  discountmg  after  this 
manner,  the  bank  is  coining  false  money.  So  clearly  do  I  see  the  dangers  of 
such  a  course  that,  if  necessary,  I  would  stop  the  pay  of  my  soldiers  rather 
than  persevere  in  it.  I  am  distressed  beyond  measure  at  the  necessities  of 
my  situation,  which,  by  compelling  me  to  live  in  camps  and  engaging  in  dis- 
tant expeditions,  withdraws  my  attention  from  what  would  otherwise  be  the 
chief  object  of  my  anxiety,  the  first  wish  of  my  heart— a  good  and  solid  or- 
ganization of  all  that  concerns  the  interests  of  banks,  manufactures,  and 
commerce.— .4hson's  Europe,  volume  7,  pages  93,  93— note.    London,  1860. 

David  Hume,  of  England,  said: 

In  our  colony  of  Pennsylvania  the  land  itself,  which  is  the  chief  commodity, 
is  coined  and  passes  into  circulation.— Hari;ei/  on  Money,  pages  60,  61.    Lon- 
don, 1877. 
1752 


Prof.  J.  Stanley  Jevons,  discussing  the  subject  of  bank  notes, 
said: 

The  right  of  coining  bank  notes.  According  to  the  view  which  I  adopt,  tho 
issue  of  notes  is  more  analogous  to  the  royal  function  of  coinage  than  to  the 
ordinary  commercial  operation  of  drawing  bills.  We  ought  to  talk  of  coining 
notes,  as  John  Law  did;  for,  though  the  design  is  impressed  on  paper  instead 
of  mcta.1,  the  function  of  the  note  is  exactly  the  same  as  that  of  a  representa- 
tive token.  As  to  the  right  to  issue  promises,  it  no  more  exists  than  the  right 
to  establish  private  mints.  For  our  present  purposes  that  alone  is  right 
which  the  Legislature  declares  to  be  expedient  to  the  community  at  large. 

As  almost  everyone  has  long  agreed  to  place  the  coinage  of  money  in  the 
hands  of  the  Executive  Government,  so  I  believe  that  the  issue  of  paper  rep- 
resentative money  should  continue  to  be  practically  in  the  hands  of  the 
Government,  or  its  agents  acting  under  the  strictest  legrislative  control.  M. 
Wolowski,  in  his  admirable  works  on  banking,  has  maintained  that  the  issue 
of  notes  is  a  function  distinct  from  the  ordinary  operations  of  a  banker; 
and  Mr.  Gladstone  has  allowed  that  the  distinction  is  a  wholesome  and  vital 
one.  Bankers  enjoy  the  utmost  degree  of  freedom  in  this  country  at  pres- 
ent in  every  other  point,  so  that  it  is  wholly  a  confusion  of  ideas  to  speak  of 
the  unrestricted  emission  of  paper  representative  money  as  a  question  of 
free  banking. 

Albert  Gallatin,  who  was  Secretary  of  the  Treasury  for  two 

terms  under  Jefferson,  and  also  under  Madison,  wrote: 

The  right  of  issuing  paper  money  as  currency,  like  that  of  issuing  gold  and 
silver  coins,  belongs  exclusively  to  the  nation,  and  can  not  be  claimed  by  any 
individuals.— GoUafin,  volume  3,  page  429. 

Mr.  Gallatin  further  said: 

But  issuing  a  paper  currency  is  not  dealing  in  money,  but  making  money 
*  *  *  The  unrestricted  right  of  coining  gold  or  silver  might  be  claimed 
with  as  much  propriety  as  that  of  coining  a  paper  currency. — Gallatin,  vol- 
ume 3,  page  431. 

Quotations  might  thus  be  extended  indefinitely,  but  the  above 
will  suffice  to  show  conclusively  that  contemporaneous  writers 
agree  that  the  right  to  "  coin  money"  as  given  to  Congress  by  the 
framers  of  the  United  States  Constitution  applies  to  paper  as  well 
as  metal  money.  And,  as  a  logical  consequence,  neither  States, 
corporations,  nor  individuals  have  any  better  right  to  issue  cur- 
rency than  they  have  to  "  coin  money."  The  coining  and  issuing 
of  money  is  an  act  of  sovereignty ,  and  it  can  not  properly  or  legally 
be  performed  except  by  the  sovereign  authority  of  the  General 
Government,  as  authorized  by  the  Federal  Constitution. 

Speaking  of  Napoleon's  sentiments  on  this  subject.  Senator 
John  Sherman  said: 

Surely,  when  Napoleon  was  so  jealous  of  the  power  of  the  Bank  of  France, 
as  William  Pitt  was  of  the  Bank  of  England,  which  were  institutions  of  a 
national  character,  under  the  control  of  the  national  legislature,  and  care- 
fully watched  by  executive  power,  to  coin  money,  or,  which  is  the  same  thing 
when  specie  payments  are  suspended,  to  issue  paper  money,  we  should  be 
jealous  of  the  power  exercised  by  a  multitude  of  local  banks  chartered  by 
1753 


twenty-eight  States,  whose  issues  are  not  secured  by  any  uniform  standard 
and  are  not  restrained  by  the  obligation  to  redeem  in  coin. 

This  idea  expressed  by  Napoleon  Bonaparte  embodies  the  real  objection  to 
bank  paper  money  issued  in  time  of  war  when  specie  payments  are  sus- 
pended. It  is  a  power  that  ought  never  to  be  exercised  except  by  the  Gov- 
ernment, and  only  when  the  State  is  in  danger.  It  is  the  power  to  coin 
money;  because  when  a  bank  issues  its  bUl  without  the  restraint  of  specie 
payments,  it  substantially  coins  noney,  and  false  money.  Sir,  this  is  a  privi- 
lege which  no  nation  can  safely  surrender  to  individuals  or  banks.— /SAermare, 
in  United  States  Senate,  February  10, 1863. 

Mr.  Speaker,  having  settled  the  point  that  money  may  be  coined 
from  either  metal  or  paper,  and  that  the  coining  and  issuing  of 
money  is  an  act  of  sovereignty  which  should  be  performed  by  the 
Government  only,  the  next  point  is  the  regulation  of  the  vahie  of 
the  money.  This,  too,  is  the  business  of  the  Government.  The 
Goverimient  must  "  coin  money  and  regulate  the  value  thereof." 
Now,  money  is  valuable  in  proportion  to  its  volume,  and  the  value 
of  a  dollar  can  only  be  regulated  by  controlling  the  number  of 
dollars  afloat.  Hence,  the  value  of  money  can  be  regulated  by 
regulating  or  controlling  its  volume,  and  in  no  other  way. 

Yes,  sir,  this  is  the  only  way  that  the  value  of  money  can  be 
"regulated."  I  know  there  is  a  theory  abroad  that  wnen  the  law 
fixes  the  number  of  grains  of  a  given  metal  that  shall  be  coined 
into  a  dollar  that  by  that  act  the  value  of  the  dollar  is  fixed.  Yet 
when  the  number  of  metal  dollars  are  scarce  they  are  much  more 
valuable  than  when  plentiful.  Gold  is  the  most  fluctuating  of 
commodities  and  is  the  least  reliable  of  the  money  metals  as  a 
standard  of  value,  it  is  of  greater  or  less  value  in  proportion  to 
the  plentifulness  or  scarcity  of  the  metal  from  time  to  time. 
Hence  the  one  and  the  only  way  that  the  value  of  money  can  pos- 
sibly be  regulated  is  by  controlling  its  volume  or  quantity  as  com- 
pared with  the  commodities  of  commerce.  It  is  in  practice  an 
agent  or  commodity  of  commerce,  and,  like  other  commodities,  it 
is  cheap  or  dear  in  proportion  to  its  supply  compared  with  the  de- 
mand for  it. 

Mr.  Speaker,  it  is  now  plain  that  the  Government  has  both  the 
authority  and  the  power  to  coin  money  of  any  proper  material, 
and  to  regulate  its  value  by  regulating  the  volume  or  supply  as 
compared  with  the  demand  for  it. 

The- next  question  is  as  to  preserving  the  value  of  money  which 
is  coined  from  a  material  without  value.  I  reply  that  all  money 
must  be  redeemed.    That  is  what  money  is  for,  to  be  redeemed. 

1758 


An  irredeemable  money  is  a  worthless  money.     But  let  iis  not  be 

misled  by  terms.    Swapping  dollars  is  not  redemption.    All  dollars, 

both  metal  and  paper  need  redemption.     Money  does  not  depe:id 

for  its  value  on  the  value  of  the  monetary  material,  bi  ^^  on  the 

values  that  are  behind  it;  on  the  ralues  of  the  commodities  with 

which  it  is  redeemed. 

Mr.  E.  G.  Spaulding,  a  banker  of  Buffalo,  N.  Y.,  who  was  a 

member  of  Congress  and  chairman  of  the  subcommittee  of  Ways 

and  Means,  in  1861-62,  stated  the  subject  of  redeeming  money 

very  plainly  and  truly  as  follows: 

Every  time  a  hundred-dollar  bill  passes  from  one  person  to  another  it  is  a 
practical  redemption  of  it  by  the  person  who  takes  it.  Every  time  a  mer- 
chant at  Chicago  pays  to  a  farmer  $500  in  national  currency  for  a  car  load  of 
wheat,  the  farmer  by  the  operation  redeems  such  national  currency  not  in 
greenbacks,  nor  in  gold,  but  in  a  commodity  better  than  either,  namely, 
wheat,  a  staple  article,  useful  to  all.  So  every  merchant  in  New  York  that 
sells  a  bale  of  cotton  goods  and  receives  his  pay  for  it  in  currency  redeems 
such  currency,  not  in  the  way  that  banks  redeem  it,  but  in  cotton  goods, 
which  is  far  better,  because  it  performs  the  true  functions  of  money  by  facil- 
itating the  legitimate  sale  of  commodities.  So  every  time  that  a  merchant  or 
manufacturer  pays  his  internal-revenue  tax  to  the  United  States  collector  in 
national  currency,  the  Government  redeems  such  currency  by  receiving  and 
discharging  such  tax.  So  every  mechanic  or  laborer  that  receives  national 
currency  for  his  services  redeems  such  currency  by  the  labor  performed.  So 
it  will  be  seen  that  just  so  long  as  the  national  currency  is  practically  re- 
deemed every  day  in  its  passage  from  hand  to  hand  in  the  payment  of  com- 
modities and  services,  and  in  the  ramified  operations  of  trade  and  business, 
both  with  the  Government  and  the  people  whose  operations  it  greatly  facili- 
tates, there  is  not  the  slightest  necessity  for  resorting  to  the  expensive  and 
risky  operation  of  assorting  and  sending  it  home  for  redemption. — Spauld- 
ing's  History,  appendix,  page  10. 

Dr.  Franklin,  discussing  the  money  question  before  a  commit- 
tee of  the  English  House  of  Commons,  said: 

The  English  bank  bUls  being  payable  in  cash  upon  sight  by  the  drawer  is 
indeed  a  circumstance  that  can  not  attend  the  colony  bUls,  for  the  reason 
just  above  mentioned,  their  bullion  being  drawn  from  them  by  the  British 
trade;  but  the  legal  tender  being  substituted  in  its  place  is  rather  a  greater 
advantage  to  the  possessor,  since  he  need  not  be  at  the  trouble  of  going  to  a 
particular  bank  or  banker  to  demand  the  money. 

On  the  question  of  issuing  a  legal-tender  paper,  Senator  John 

Sherman,  in  his  speech  of  February  13,  1852,  said: 

The  power  to  fix  the  standard  of  money,  to  regulate  the  medium  of  ex- 
changes, must  necessarily  go  with,  and  be  incident  to,  the  power  to  regulate 
commerce,  to  borrow  money,  to  coin  money,  to  maintaia  armies  and  navies. 
All  these  high  powers  are  expressly  prohibited  to  the  States,  and  also  the 
incidental  power  to  emit  bills  of  credit,  and  to  make  anything  but  gold  and 
silver  a  legal  tender. 

But  Congress  is  expressly  invested  with  all  these  high  powers,  and,  to 
remove  all  doubt,  is  expressly  authorized  to  use  all  necessary  and  proper 
1762 


means  to  carry  these  powers  into  effect.  Congress  is  not  prohibited  from 
emitting  bills  of  credit  or  from  making  a  standard  of  value,  nor  are  these 
powers  expressly  conferred.  Congress  has  repeatedly  issued  bills  of  credit; 
it  has  fixed  gold  and  silver  as  the  standard  of  value,  and  made  them  a  legal 
tender.  Certainly  gold  and  silver  coin  is  the  best  standard  of  value,  for  it 
has  inherent  value  in  aU  commercial  countries;  but  if,  in  the  course  of  events, 
gold  and  silver  can  not  be  had  in  quantities  sufficient  to  form  a  medium  of 
exchange  for  the  increased  wants  of  the  country,  then  Congress  may  estab- 
lish another  medium  of  exchange— another  standard  of  value.  This  was 
twice  done  by  establishing  a  Bank  of  the  United  States.  I  much  prefer  the 
credit  of  the  United  States,  based  as  it  is  upon  all  the  productions  and  prop- 
erty of  the  United  States,  to  the  issues  of  any  corporation,  however  well 
guarded  and  managed. 

Further  along  in  the  same  speech  Mr.  Sherman  said: 

If  you  strike  out  this  legal-tender  clause  you  do  it  with  the  knowledge  that 
these  notes  will  fall  dead  upon  the  money  market  of  the  world;  that  they 
will  be  refused  by  the  banks;  that  they  will  be  a  disgraced  currency  that 
will  not  pass  from  hand  to  hand;  that  they  will  have  no  legal  sanction;  that 
any  man  may  decUne  to  receive  them,  and  thus  discredit  the  obligations  of 
the  Government.  I  ask  again  if  that  is  just  to  the  men  to  whom  you  have 
contracted  to  pay  debts?  When  you  issue  demand  notes  and  announce  your 
purpose  not  to  pay  any  more  gold  and  silver  coin,  you  tender  to  those  who 
have  furnished  provisions  and  services  this  paper  money.  What  can  they 
do?  They  can  not  pay  their  debts  with  it,  they  can  not  support  their  fami- 
lies with  it,  without  a  depreciation.  The  whole,  then,  depends  upon  the 
promise  of  the  Government  to  pay  at  sometime  not  fixed  on  the  face  of  the 
note,  and  you  bring  about  an  era  of  irredeemable,  depreciated  paper  money. 

In  his  speech  of  January  8,  1863,  Senator  Sherman  discussed 

this  subject  again  and  said: 

There  can  be  no  doubt  about  the  power  of  Congress  on  this  subject;  and,  in 
order  to  fortify  my  opinion  and  show  that  the  whole  qiiestion  has  been  ex- 
amined by  much  wiser  men,  I  will  read  an  extract  from  the  report  of  Mr. 
Dallas,  in  December,  181.5.  I  read  this  short  extract  to  show  that  never  was 
the  exclusive  power  of  Congress  over  the  currency  denied  even  by  those  gen- 
tlemen who  were  in  favor  of  gold  and  silver  as  the  standard  of  all  values. 
Mr.  Dallas,  in  his  famous  report  made  in  December,  1815,  says: 

"  By  the  Constitution  of  the  United  States  Congress  is  expressly  vested 
with  the  power  to  coin  money,  to  regulate  the  value  of  domestic  and  foreign 
coins  in  circulation,  and  (as  a  necessary  implication  from  positive  provisions) 
to  emit  bills  of  credit,  while  it  is  declared  by  the  same  instrument  that  '  no 
State  shall  coin  money  or  emit  bills  of  credit.'  *  *  *  The  constitutional 
authority  to  emit  bills  of  credit  has  also  been  exercised  in  a  qualified  and 
limited  manner.  During  the  existence  of  the  Bank  of  the  United  States  the 
bills  or  notes  of  the  corporation  were  declared  by  law  to  be  receivable  in  all 
payments  to  the  United  States,  and  the  Treasury  notes,  which  have  been 
since  issued  for  the  services  of  the  late  war,  have  been  endowed  with  the 
same  quality.    *    *    * 

"  The  constitutional  and  legal  foundation  of  the  monetary  system  of  the 
United  States  is  thus  distinctly  seen;  and  the  power  of  the  Federal  Govern- 
ment to  institute  and  regulate  it,  whether  the  circulating  medium  consist  of 
coin  or  of  bills  of  credit,  must,  in  its  general  policy,  as  well  as  in  the  terms  of 
its  investment,  be  deemed  an  exclusive  power.  It  is  true  that  a  system  de- 
pending upon  the  agency  of  the  precious  metals  will  be  affected  by  the  va- 
rious circumstances  which  diminish  their  quantity  or  deteriorate  their  qual- 
ity. The  coin  of  a  State  sometimes  vanishes  under  the  influence  of  political 
1752 


8 

alarms,  sometimes  in  consequence  of  the  explosion  of  mercantile  specula- 
tions, and  sometimes  by  the  drain  of  an  unfavorable  course  of  trade.  But 
whenever  the  emergency  occurs  that  demands  a  change  of  system,  it  seems 
necessarily  to  follow  that  the  authority  which  was  alone  competent  to  estab- 
lish a  national  coin  is  alone  competent  to  create  a  national  substitute." 

These  extracts  from  a  document  of  great  abUity  state  the  whole  (luestion 
in  a  few  words.  Congress  has  the  power  to  regulate  commerce;  Congress 
has  the  power  to  borrow  money,  which  involves  the  power  to  emit  bills  of 
credit;  Congress  has  the  power  to  regulate  the  value  of  coin.  These  powers 
are  exclusive.  When,  by  the  force  of  circumstances  beyond  our  control,  the 
national  coin  disappears,  either  because  of  war,  or  of  other  circumstances, 
Congi'ess  alone  must  furnish  the  substitute.  No  State  has  the  power  to  inter- 
fere with  this  exclusive  power  in  Congress  to  regulate  the  national  currency, 
or,  in  other  words,  to  provide  a  substitute  for  the  national  coin. 

Mr.  Speaker,  from  all  that  has  been  said  it  appears  that  a  money, 
either  metal  or  paper,  that  is  receivable  in  the  revenues  of  the 
issuing  government  is  good  money,  and,  then,  if  in  addition  to 
that  receivability  it  is  endowed  with  the  quality  of  general  legal 
tender,  it  becomes  redeemable  with  all  the  commodities  or  values 
that  are  for  sale  in  the  country.  Such  a  money  rests  not  on  gold 
alone,  but  on  all  values,  and  all  men  are  eager  to  redeem  and 
accept  such  money  to  the  utmost  extent  of  the  values  they  have 
for  sale. 

But,  sir,  an  important  point  like  this  can  not  be  too  closely  ex- 
amined or  too  strongly  supported.  I  therefore  caU  attention  to 
the  following  discussion  of  the  matter  from  an  English  stand- 
point. The  Daily  Star,  of  Montreal,  December  6, 1893,  discussing 
my  paper  in  the  Arena,  of  Boston,  on  the  "  Bank  of  Venice,"  said: 

But  let  us  suppose  that  the  whole  people  of  the  United  States,  for  instance, 
would  mutually  agree  to  accept  such  a  system,  would  that  solve  the  problem? 
This  is  what  Congressman  Davis  proposes.    He  says: 

"As  Americans  we  may  learn  a  lesson  from  the  Bank  of  Venice  and  improve 
upon  the  system.  We  may  admit  the  deposit  of  gold  and  silver  in  the  Treas- 
ury as  Venice  did,  and  instead  of  placing  it  to  the  credit  of  the  depositor  we 
can  issue  him  a  legal-tender  Government  note.  That  note  should  read,  '  Re- 
ceivable in  the  revenues  of  the  Government,  and  lawful  money  in  all  pay- 
ments.' The  deposits  and  the  issuing  of  the  notes  in  the  proper  denomina- 
tions and  amounts  should  end  the  transaction.  There  need  be  no  money 
held  in  the  vaults  of  the  Government  for  redemption  purposes." 

Let  us  suppose  the  United  States  is  satisfied  with  this.  Then  what  about 
the  rest  of  us?  What  would  a  London  merchant  say  if  asked  to  sell  goods 
for  a  United  States  note,  redeemable  nowhere  in  particular,  unless  he 
wanted  to  pay  some  United  States  customs  charges?  His  prices  would  go 
up  like  a  balloon.  How  could  such  money  compete  with  gold  that  would  do 
all  it  could  and  immeasurably  more?  It  would  be  the  old  mistake  of  imagin- 
ing that  when  trade  is  world-wide  the  machinery  of  trade  can  be  .safely  tam- 
pered with  by  one  nation.  Even  the  powerful  and  rich  Venetian  Govern- 
ment, we  are  told  by  Mr.  Davis,  used  coin  "in  foreign  countries  and  anions; 
barbarous  peoples,  where  paper  credits  could  not  be  used." 
1752 


9 

If  tlie  editor  of  the  Star  had  read  his  own  British  writers  on  this 
subject  he  would  not  have  asked  the  above  questions.  Men  and 
nations  do  not  make  payments  in  foreign  countries  with  money,  but 
with  commodities — vdth  wheat,  cotton,  pork,  bullion,  etc.— never 
with  money.  Venice  used  bullion  when  trading  vnth  barbarians, 
and,  having  a  domestic  money  not  subject  to  exportation,  the  repub- 
lic was  able  to  devote  all  its  bidlion  to  the  foreign  trade  without  de- 
ranging its  domestic  finances.  My  critic  will  observe  that  London 
merchants  do  not  sell  goods  payable  in  foreign  money,  but  in  ex- 
change convertible  into  English  money.  With  a  domestic  non- 
exportable  currency  in  the  United  States,  aU  of  our  bullion  could 
be  used  abroad  without  deranging  our  home  finances.  This  doc- 
trine is  not  new,  and  it  seems  strange  that  a  great  British  editor 
shoTild  stUl  remain  in  the  kindergarten  class  on  so  important  a 
subject. 

Sir  Archibald  Alison,  in  his  History  of  Europe,  Volume  VI., 
Chapter  XXXV.,  new  series  London  edition,  1860,  discusses  this 
subject  very  fully.  He  argues  that  the  great  objects  of  a  currency 
are  to  be  "  adequate  and  retainable."  It  must  not  be  exportable. 
Nor  should  it  be  established  on  a  basis  "  which  is  either  too  narrow 
or  liable  to  fluctuation."    Mr.  Alison  says: 

A  system  of  currency  mainly  dependent  on  the  retention  of  gold  leads  to 
alternations  of  prosperity  and  suffering  as  inevitably  as  night  succeeds  day 
and  day  night,  and  that  altogether  irrespective  of  drains  of  gold  from  ex- 
traneous causes,  such  as  war  loans,  extensive  importations  of  grain  owing  to 
bad  harvests,  or  the  like,  which  necessarily,  and  still  more  immediately,  lead 
to  a  ruinous  contraction  of  the  currency,  and  consequent  stoppage  of  credit 
and  general  suffering.    *    *    * 

In  the  first  place,  if  the  gold  can  only  be  retained,  when  exchanges  become 
adverse,  by  strengthening  industry,  starving  the  country,  and  so  lowering 
the  prices  of  the  produce  of  every  species  of  industry,  the  r'jmedy  is  worse 
than  the  disease.  Gold  is  a  very  good  thing  and  necessary  for  foreign  ex- 
changes, but  it  is  not  worth  purchasing  by  the  ruin  of  the  country.  In  every 
one  of  the  great  monetary  crises  which  have  occurred  every  five  or  six  years 
during  the  last  thirty,  from  a  hundred  to  a  hundred  and  fifty  millions  ster- 
ling have  been  destroyed.  Is  the  retention  of  gold  worth  purchasing  at  such 
a  price?  "What  is  the  use  of  it,  if  it  can  only  be  retained  by  making  the  capi- 
talists rich  and  all  other  classes  poor? 

In  order  to  establish  a  safe  and  satisfactory  domestic  currency, 
Mr.  Alison  says: 

The  currency  should  be  issued  by  Government  and  Government  only,  and 
the  nation  responsible  for  its  value  as  it  is  for  the  3  per  cents.  Nothing 
would  be  easier  than  to  establish  such  a  currency,  and  confine  it  within  the 
requisite  limits.    *    *    * 

It  belongs  to  practical  men  to  devise  the  details  of  such  a  system;  but  if 
honestly  set  about  by  men  of  capacity  nothing  will  be  more  easy  of  accom- 
1752 


10 

plishment.  And  it  may  be  safely  affirmed  tliat  if  tlac  requisite  change  is  not 
made  the  nation  will  continue  to  bo  visited  every  four  or  five  years  by  periods 
of  calauiity  which  will  destroy  all  the  fruits  of  former  prosperity,  like  the 
unfortunate  culprits  who,  under  the  former  inhuman  system  of  military  law, 
when  sentenced  to  one  thoiisand  or  fifteen  hundred  lashes,  were  brought  out 
at  successive  times  to  receive  their  punishment  by  installments  as  soon  as 
their  wounds  had  been  healed  in  the  hospital. 

The  sad  experiences  of  England  for  several  hundred  years,  with 
her  full  bullion  value  exportable  silver  coins,  should  have  taiii^ht 
our  critic  a  lesson.  Finally  that  conservative  Government,  in 
1816,  determined  to  coin  6  pence  from  an  ounce  of  silver  instead 
of  62.  After  that  the  British  silver  coins  were  nonexportable; 
they  then  stayed  at  home  and  served  the  people.  At  the  present 
time  the  bullion  value  of  the  English  silver  coins  is  about  half 
their  coin  value,  with  no  evil  results.  I  wonder  that  my  critic 
has  not  considered  these  facts. 

Suppose  a  British  subject  should  buy  wheat  in  America  and 
offer  English  silver  money  in  payment?  What  would  be  done  in 
the  premises?  Simply  this:  The  payment  would  not  be  made  with 
English  money  at  all,  but  with  bullion,  or  some  form  of  valuable 
commodities,  or  with  exchange  convertible  into  American  money. 
Wlien  my  critic  graduates  from  the  kindergarten  class  and  reads 
the  horn  books  on  finance,  he  will  learn  that  there  is  no  inter- 
national money.  Money  is  and  should  be  a  domestic  device  only. 
It  should  be  nonexportable.  It  should  not  be  based  on  an  ex- 
portable commodity,  but  on  the  quality  of  legal  tender.  Then, 
and  not  until  then,  it  may  become  adequate  and  retainable,  which, 
Mr.  Alison  claims,  are  "  the  greatest  objects  of  a  currency." 

Mr.  Alison  discusses  the  fluctuations  of  gold  as  a  basis  for 

money  in  Volume  I,  page  132,  as  foUows: 

He  [Mr.  Homer]  saw  clearly  that  oscillations  in  the  value  of  money,  and 
consequently  in  the  price  of  every  article  of  commerce,  were  among  the  most 
grievous  evils  which  can  aflBict  society,  and  rendered  property  and  undertak- 
ings of  every  kind  to  the  last  degree  insecure;  and  he  thought  that  he  would 
gruard  effectually  against  them  by  fixing  the  entire  currency  on  a  gold  basis, 
forgetting  what  he  himself  at  the  same  time  saw,  that  gold  itself  is  an  article  of 
commerce,  and,  like  every  other  such  article,  is  subject  to  perpetual  variations 
of  price;  and  that,  from  its  being  so  portable  and  valuable,  and  everywhere  in 
request,  it  is  subject  to  more  sudden  and  violent  changes  of  value  than  any 
other  article  in  existence. 

That  is  British  history  and  British  sentiment;  and  yet  we  find 
a  British  subject  in  Canada  contending  for  the  oscillating,  export- 
able, and  unsafe  gold  basis  for  money,  under  the  infantile  im- 
1752 


11 

pression  that  money  is  or  should  oe  international.  The  bank  funds 
of  Venice  were  a  nonexportable  domestic  money,  setting  free  all 
bullion  for  the  foreign  ti'ade;  yet,  to  a  greater  extent  than  usual, 
those  book  credits  performed  also  the  functions  of  an  international 
money  for  large  payments  among  the  commercial  and  more  civi- 
lized tribes  and  nations  bordering  upon  the  Mediterranean, 

Mr,  Speaker,  the  discussion  of  the  money  question  seems  to  per- 
vade the  very  air  in  all  parts  of  the  country.  I  have  letters  asking 
the  status  of  the  first  $60,000,000  of  United  States  Treasury  notes 
issued  during  the  war.  In  reply  I  v?ill  state  that  the  first  fifty 
millions  were  authorized  by  the  act  of  July  17,  1861,  and  an- 
other ten  millions  were  authorized  by  the  act  of  February  12,  1863. 
These  two  issues  made  up  the  sixty  millions  of  notes  in  question. 
They  did  not  bear  interest.  They  were  not  at  first  legal  tender. 
They  were  legally  redeemable  in  coin  "on  demand,"  which  caused 
them  to  be  called  ' '  demand  notes, "  But  as  the  coin  of  the  country 
disappeared  during  the  first  six  months  of  the  war  they  could  not 
be  redeemed  in  coin  when  demanded,  so  they  began  to  depreciate. 
In  this  emergency  the  Secretary  of  the  Treasury  ordered  them  to 
be  received  for  duties  on  imports.  As  soon  as  they  were  thus  re- 
ceived they  rose  to  par  with  coin.  In  addition  to  being  receivable 
in  the  revenues  of  the  Government,  the  act  of  March  17,  1863, 
made  the  demand  notes  legal  tender  to  the  same  extent  as  the 
greenback. 

To  recapitulate:  The  demand  notes,  amounting  to  $60,000,000, 
were  not  actually  redeemed  in  coin  during  the  war  because  the 
coin  was  not  on  hand,  but  they  were  receivable  by  the  Government 
the  same  as  coin,  and  were  legal  tender  to  everybody  except  bond- 
holders. These  qualities  of  legal  tender  and  receivability  kept 
them  as  good  as  gold  at  all  times,  while  the  greenbacks  which 
were  not  receivable  by  the  Government  depreciated  badly. 

It  will  be  noted  that  the  greenback  and  the  demand  note  were 
equally  redeemable  on  demand.  The  greenbacks  bear  no  future 
date  of  redemption,  hence  they  are  due  on  demand  in  accordance 
with  a  recognized  principle  of  law,  that  a  note  demanding  pay- 
ment with  no  date  of  maturity  is  due  on  demand.  Such  in  prac- 
tice and  in  law  is  a  demand  note.  Hence  the  greenbacks  were 
due  and  redeemable  in  coin  the  moment  of  issue  the  same  as  the 

1752 


12 

demand  notes,  but  through  lack  of  coin,  in  point  of  fact,  neither 
was  so  redeemed  during  the  war. 

So,  in  the  matter  of  coin  redemption,  the  demand  notes  and  the 
greenbacks  were  on  the  same  legal  footing.  In  the  matter  of 
legal  tender  to  individuals  they  were  on  the  same  footing  after 
March  17, 1862.  The  demand  notes  were,  however,  receivable  in 
the  revenues  of  the  Government  and  the  greenbacks  were  not. 
That  was  the  only  legal  difference.  This  gave  rise  to  the  differ- 
ence in  values  of  the  two  classes  of  notes  during  the  war  and  up 
to  October,  1878,  when  the  Government  began  to  receive  the 
greenback  in  the  revenues. 

The  late  Judge  Martin,  in  his  work  on  the  Money  of  Nations, 
cites  numerous  examples  of  the  efiicacy  of  receivability  on  the 
part  of  the  Government  in  the  maintenance  of  money  at  par.  At 
page  168  he  says: 

Any  paper  money  issued  by  the  United  States,  and  made  receivable  for  all 
debts  due  tbe  Government  will  always  be  preferred  to  coin. 

Every  step  of  United  States  history  under  the  Constitution  proves  this: 

"1.  The  notes  of  the  first  bank  of  the  United  States,  from  1791  until  1811, 
were  made  by  the  law  creating  the  bank  full  legal  tender  for  all  debts  due 
the  United  States,  whether  the  bank  paid  coin  or  not.  These  notes  were 
always  preferred  to  coin. 

"2.  The  Treasury  notes  issued,  with  and  without  interest,  in  1812,1813,1814' 
and  1815  were  full  legal  tender  for  all  debts  due  the  Government,  and  Galla- 
tin and  Campbell,  Secretaries  of  the  Treasury,  say  were  equal  to  coin,  though 
the  banks  opposed  them  as  they  do  legal-tender  notes  now.    (1880.) 

"3.  The  notes  of  the  Bank  of  the  United  States  from  1816  until  1836  were 
made  by  the  law  creating  the  banks  full  legal  tender  for  all  debts  due  the 
United  States.  They  were  for  twenty  years,  at  home  and  abroad,  better 
than  and  preferred  to  coin.  From  1837  until  1848  the  Treasury  notes  of  the 
United  States,  to  the  amount  of  nearly  $100,000,000,  with  and  without  interest, 
were  not  only  par  with  but  preferred  to  coin,  for  the  reason  that  the  law 
made  them  receivable  for  aU  debts  due  the  United  States. 

"4.  In  1857  Congress  authorized  the  issue  of  $20,000,000  Treasury  notes,  which 
the  law  made  full  legal  tender  for  all  debts  due  the  Government.  They  were 
equal  with  and  preferred  to  coin. 

"5.  In  1861  and  1862,  before  the  issue  of  legal-tender  notes,  Cengress  issued 
$60,000,000  demand  notes.  They  were  payable  in  coin,  but  at  first  they  were 
not  made  legal  tender  for  debts  due  the  Government.  They  went  to  a  dis- 
count, though  payable  in  coin.  But  when,  by  the  order  of  Secretary  Chase, 
they  were  made  receivable  for  duties  on  imports,  they  were  at  once  not  only 
equal  with  coin,  but  preferred  thereto.  In  1862  they  were  made  full  legal 
tender." 

On  page  164  Judge  Martin  states  that  $69,000  of  the  demand 

notes  were  still  in  circulation  in  1880.    The  rest  has  been  redeemed 

and  retired. 

Mr.  Speaker,  much  is  said  about  the  necessity  of  having  a  flexi- 
1752 


13 

ble  currency.  A  currency  that  will  be  plentiest  at  those  times 
when  most  needed  to  move  the  farmers'  crops  to  market,  and 
which  then  may  be  retired  when  not  sc  much  needed.  It  is 
argued  that,  in  order  to  insure  flexibility,  the  power  to  control 
the  money  should  be  surrendered  to  the  banks,  with  the  infantile 
"confidence"  that  they  (the  banks)  will  control  the  volume  of 
the  money  in  the  interest  of  the  people.  Sir,  our  sad  experiences 
and  observations  as  to  bank  management  of  the  currency  has 
proven  the  dangers  of  such  a  policy.  When  money  is  most  needed 
it  has  been  the  practice  of  the  banks  to  make  money  scarce,  that 
they  may  put  up  the  interest  and  reap  a  larger  profit.  When 
money  is  less  needed  they  will  ask  less  for  its  use,  and  it  can  be 
had  cheaper.  This  is  the  logic  of  the  matter,  and  the  facts  prove 
it  to  have  been  the  practice.  The  banks  are  not  doing  business 
for  charity's  sake  and  they  never  do,  but  for  profit,  and  if  per- 
mitted to  control  the  currency  they  will  make  it  flexible  in  their 
own  interests  and  against  the  interests  of  the  people.  This,  sir, 
has  been  the  uniform  history  of  the  past,  and  in  the  very  nature 
of  things  it  can  not  be  otherwise. 

Mr.  Speaker,  we  do  not  need  or  want  a  flexible  currency,  but, 
on  the  other  hand,  we  need  a  steady,  unfluctuating  currency. 
There  is  no  period  of  the  year  when  money  is  not  needed.  The 
wheat  crop  is  ready  for  market  in  the  South  in  May  and  June,  in 
the  Middle  States  in  July  and  August,  farther  north  in  September 
and  later.  And,  sir,  wheat  will  keep  in  the  bin  of  the  farmer  and 
may  be  marketed  and  sold  and  the  flour  handled  the  entire  year. 
The  same  general  principle  holds  good  with  corn  and  all  the  cere- 
als, and  with  wool  and  cotton.  As  to  pork  and  beef,  with  cold 
storage  and  frozen  shipment  the  marketing  season  lasts  all  the 
year.  The  marketing  of  fruits  and  vegetables  begins  with  the 
early  berries  and  other  early  fruits  in  the  spring  and  ends  with 
potatoes,  winter  apples,  oranges,  and  lemons  the  following  spring. 
The  sale  of  horses  and  other  live  stock  on  foot  is  confined  to  no 
particular  season.  Nor  are  the  products  of  the  shops,  factories, 
and  mills  thrown  on  the  market  in  bulk,  to  be  sold  at  any  special 
time  of  the  year. 

Mr.  Speaker,  when  we  come  to  examine  this  subject  in  all  its 
parts  we  find  there  is  no  particular  season  of  the  year  when  all 
1752 


14 

the  products  of  land  and  labor  must  be  thrown  upon  the  markets 
to  be  sold,  but,  sir,  on  the  other  hand,  when  we  consider  our  vari- 
ous climates  and  products,  and  our  diversified  industries,  it  will 
be  seen  that  salable  commodities  dovetail  into  each  other  as  to 
times  and  seasons  most  beautifully  and  perfectly,  and  that  there 
is  never  a  month  of  the  entire  year  when  there  is  not  a  steady 
stream  of  commodities  flowing  into  the  markets.  Hence,  then, 
we  do  not  want  a  flexible  or  fluctuating  money.  Such  a  money 
as  we  need  has  never  been  furnished  by  the  banks,  and,  in  the 
very  nature  of  things,  can  never  be.  But,  on  the  other  hand,  it 
can  be  furnished  by  the  Government,  and  the  Government  only. 

This  is  the  uniform  testimony  of  all  history  and  experience  in 
this  country.  Give  us  a  uniform,  steady,  and  unfluctuating  cur- 
rency, issued  by  the  Government,  receivable  in  the  Government 
revenues,  legal  tender  in  all  payments,  and  in  sufiicient  volume  to 
maintain  a  normal  sea  level  of  average  prices,  and  the  people  will 
have  firm  ground  to  stand  upon.  A  commercial  system  thus 
founded  will  have  stability,  safety,  and  firmness,  It  will  be  built 
upon  a  rock  which  will  not  be  shaken  by  the  shifting  sands  of 
other  systems  founded  on  "flexibility  "  in  the  hands  of  banking  in- 
stitutions. A  flexible  or  elastic  currency  in  the  hands  of  the  banks 
means  unlimited  power  over  the  people  and  their  dearest  interests. 
A  steady,  unfluctuating  currency  in  the  hands  of  the  Government 
means  prosperity  for  the  people  and  the  country.  It  is  the  sim- 
plest possible  system  of  finance,  older  and  better  tried  than  all 
others,  and  always  successful  and  satisfactory  when  fairly  tried. 

Mr.  Speaker,  the  President  and  most  of  the  journals  of  the 
East  insist  on  a  paper  remedy  for  our  distresses  in  the  form  of 
interest-bearing  bonds.  Sir,  there  is  a  better  way.  Since  gold, 
by  its  scarcity  and  cowardly  absence,  fails  to  meet  the  necessities 
of  the  occasion,  and,  since  we  must  appeal  to  paper,  why  not 
choose  the  best  form  of  paper?  And  since  the  best  paper  is  the 
least  costly  for  the  people,  there  are  two  great  reasons  for  adopt- 
ing it.  It  seems,  by  the  admission  of  all,  that  a  legal-tender  cur- 
rency in  this  country  at  the  present  time  is  about  as  good  as  3 
per  cent  bonds,  and  they  are  both  at  the  present  time  on  a  par 
v/ith  gold  coin.  This  being  so,  the  gold  reserve  can  be  as  easily 
and  readily  replenished  with  a  legal-tender  noninterest-bearing 

1753 


10 

Treasury  note  as  with  a  3  per  cent  bond.  In  other  words,  endow 
your  noninterest-bearing  Treasury  note  with  all  the  legal-tender 
qualities  attached  to  gold  coin  and  we  car.  buy  gold  coin  w^th  it 
as  readily  as  with  a  3  per  cent  bond.  This  will  save  the  interest 
on  the  bonds,  and  the  currency  will  enter  into  circulation  as 
money  and  give  prosperity  to  the  country. 

As  to  the  redemption  of  the  Treasury  notes,  of  course  that  must 
be  provided  for.  All  money  must  be  redeemed  with  value.  Gold 
redemption  is  neither  safe,  satisfactory,  nor  necessary.  We  must 
provide  a  better,  broader,  and  safer  redemption  than  that.  In 
the  first  place,  as  already  stated,  the  currency  must  be  receivable 
in  the  public  revenues.  That  is  primary  redemption  by  the  Grov- 
ernment.  In  the  second  place,  the  currency  being  legal  tender  in 
all  payments,  it  will  be  eagerly  redeemed  by  the  people  with  all 
the  values  in  the  country  that  are  for  sale.  And  a  currency  so 
redeemed,  resting  on  aU  the  revenues  of  the  National  and  State 
Governments  and  on  all  commercial  values,  need  not  be  other- 
vnse  redeemable.  Hence  there  would  be  no  necessity  for  main- 
taining a  gold  reserve.  Any  gold  needed  for  special  purposes 
could  be  readily  purchased  with  the  Government  currency.  No 
interest-bearing  bonds  would  be  needed  and  the  financial  prostra- 
tion of  the  country  wotdd  be  changed  to  financial  and  industrial 
prosperity. 

Mr.  Speaker,  I  am  not  mentioning  any  new  or  untried  experi- 
ment. I  appeal  to  the  facts  of  history  as  they  have  transpired  in 
commercial  nations.  It  is  a  well-known  uniform  fact  that  the 
lawful  currency  of  a  given  country  is  more  valuable  than  the  bonds 
of  that  same  country,  until  sufficient  interest  or  usury  has  been 
attached  to  the  bonds  to  bring  them  up  to  par  with  the  currency. 

Mr.  Speaker,  I  ask  attention  to  some  illustrations  of  the  posi- 
tion I  have  here  taken.  The  case  of  the  Bank  of  Venice  is  the 
oldest  well-authenticated  case  in  point.  And  I  ask  special  atten- 
tion to  three  principal  features  of  the  Venetian  finances. 

Besides  the  bank  funds  for  large  payments  by  transfers  on  the 

books,  and  besides  the  cash  office  for  smaller  special  purposes, 

there  was  an  interest-bearing  debt.     This  debt  arose  from  the 

policy  of  limiting  the  bank  deposits  to  the  needs  of  business  and 

not  expanding  the  bank  funds  recklessly  to  the  full  amount  of  the 
1753 


16 

expenditures  of  the  Republic.    And  gentlemen  may  be  surprised 

to  learn  that,  while  the  noninterest-bearing  bank  funds  were  at 

all  times  above  par  as  compared  with  coin,  the  interest-bearing 

bonds  were  never  at  par. 

Mr.  Sidney  Dean,  in  his  History  of  Banking  and  Banks,  states 

a  well-known  fact,  as  follows: 

Near  the  close  of  the  eighteenth  century,  while  the  bank  credits  were  at  a 
premium  and  in  demand,  the  bonds  of  the  Venetian  Government  were  quoted 
at  60  per  cent  of  their  nominal  value.  It  is  clear  from  this  that  the  bank 
credits  had  something  behind  them  more  substantial  than  popular  confidence 
in  the  Government  of  the  Republic  itself.    (Page  15. ) 

The  question  at  once  arises  in  full  force  and  prominence,  What 
was  that  "  something  "  behind  the  circulating  bank  credits  "more 
substantial "  than  was  behind  the  Government  bonds?  Both  the 
bonds  and  the  bank  credits  had  the  "popular  confidence  in  the 
Government  of  the  Republic  "  behind  them.  The  bonds  also  had 
the  promise  of  coin  redemption  and  the  profits  of  interest  to  sus- 
tain them.  The  bank  credits  had  neither  the  promise  of  coin  re- 
demption nor,  at  that  date,  the  profits  of  interest  to  rest  on,  but 
"  something  more  substantial."  What  was  that  "something"? 
There  can  be  but  one  answer.  That  ' '  something  more  substantial 
than  confidence  in  the  Government  of  the  Republic, "  more  substan- 
tial than  coin  redemption  and  the  profits  of  interest,  was  the  de- 
mand for  payments— for  use  as  money — arising  from  the  quality 
of  legal  tender  in  the  usual  transactions  of  business. 

To  show  that  this  apparently  strange  fact  is  nothing  unusual, 
it  may  be  remarked  that  during  the  Napoleonic  wars  the  nonin- 
terest-bearing, legal-tender  English  currency  was  twice  as  valuable 
as  the  3  per  cent  gold-bearing  bonds  of  England.  In  proof  of 
this  I  ask  attention  to  the  following  statement  of  Mr.  Alison  in 
his  History  of  Europe  (Volume  VHI,  page  68,  note). 

Mr.  Alison  says: 

The  public  creditors  were  frequently,  in  the  3  per  cents,  inscribed  for  much 
more  than  100  pounds  in  consideration  of  60  pounds  advanced.  In  particular 
in  1807  they  received  no  less  than  140  pounds  of  stock  for  each  60  pounds  paid. 

That  is  to  say,  the  British  3  per  cent  bonds  were  worth  only  40 
to  60  per  cent  of  their  face  value,  while  at  the  same  time  British 
legal-tender  currency  was  circulating  in  the  channels  of  business 
at  par  with  gold.  On  this  latter  point  Mr.  Alison  (Volume  IV, 
pages  234,  225)  says: 

17.52 


17 

Notwithstanding  all  that  the  spirit  of  party  may  have  alleged,  there  does 
not  appear  ever  to  have  been  any  trace  of  the  latter  effect  (the  depreciation 
of  paper)  in  this  country,  or  that  at  any  period  a  higher  price  was  exacted 
for  articles  when  paid  in  bank  notes  than  in  gold. 

These  facts  clearly  prove  that  the  demand  for  payments,  aris- 
ing from  the  qviality  of  legal  tender,  is  far  more  powerful  in 
sustaining  the  value  of  Government  paper  than  is  the  expensive 
adjunct  of  interest  or  usury.  The  same  thing  is  plainly  proven 
by  the  fact  that  during  our  late  war  the  gold-bearing  American 
bonds  were  frequently  20  to  50  per  cent  below  par  as  compared 
with  coin,  while  that  portion  of  otir  currency  which  was  receiva- 
ble in  the  Government  revenues  was  uniformly  at  par  with  coin. 

Mr.  Speaker,  a  savage  can  readily  perceive  that  the  earth  will 
support  heavy  burdens,  and  that  a  burden  maybe  lifted  by  a  man 
or  drawn  by  a  horse;  but  he  may  doubt  that  the  yielding  water  of 
the  sea  can  bear  a  ship  with  a  cargo  of  1,000  tons,  and  that  said 
ship  can  be  driven  to  all  parts  of  the  globe  by  the  fickle  and  unre- 
liable winds  of  heaven.  And  when  we  tell  him  that  a  few  ounces 
or  pounds  of  superheated  vapor  of  water  will  drive  a  ship  of  iron 
through  the  billows  of  the  ocean  at  the  rate  of  hundreds  of  miles 
per  day,  we  excite  his  derision.  Then  if  we  say  to  him  that  the 
unseen  and  imponderable  thing  known  as  electricity  can  act  more 
powerfully  and  more  speedily  than  steam,  he  will  lose  patience. 
If  we  go  still  further  and  try  to  explain  to  him  that  the  entity 
known  as  the  mind  and  will  of  man  is  still  more  powerful,  subtle, 
and  active  than  either  water,  steam,  or  electricity,  and  that  this 
godlike  attribute  can  harness  to  its  service  all  the  potent  elements 
of  nature,  he  will  no  longer  listen  to  us. 

Now,  it  is  this  last  and  greatest  power,  known  as  the  will  of 
man,  enacted  into  law  by  a  sovereign  government,  which  is  the 
true  basis  for  money.  Of  course  the  untutored  mind  can  not  com- 
prehend this;  and  yet  this  is  the  broad,  sound,  and  stable  basis  for 
money  which  has  always  succeeded  and  never  failed  when  fairly 
tried.  It  is  this  broad  and  safe  basis  for  money  that  the  gold  vul- 
tures desire  to  discredit  and  abolish.  They  desire  to  bind  the 
Prometheus  of  our  civilization  to  the  rock  of  savagery,  and  to 
give  us,  instead,  the  open  box  of  Pandora.  To  do  this  they  cor- 
rupt the  corruptible;  they  flatter  and  cajole  the  ambitious;  and, 
through  a  truckling  and  subsidized  press,  they  mislead  the  unsus- 

1752 


18 

pecting.    All  this  has  been  done  and  is  being  done  to  degrade  sil- 
ver and  to  destroy  the  sovereignty  of  the  Government  over  money. 
Mr.  Speaker,  in  an  editorial  of  the  Times,  of  this  city,  dated  De- 
cember 22,  1894,  I  find  the  following: 

There  is  plenty  of  money  in  the  country  if  a  way  could  be  found  to  make  it  cir- 
culate. At  present  most  of  it  lies  locked  up  in  banks  and  other  places  of  de- 
posit, there  to  remain  until  a  revival  of  trade  puts  it  in  circulation.  Start 
up  our  mills  and  factories  on  full  time,  giveworkins.r  people  a  remunerative 
employment,  create  a  demand  for  our  products,  and  there  will  be  no  scarcity 
of  money.  Our  monetary  system  needs  remodeling,  but  not  on  the  Carlisle 
plan. 

Mr.  Speaker,  if  we  will  cast  aside  all  prejudices  and  preconceived 
opinions  on  the  subject  and  look  at  the  naked  facts  in  the  case  the 
money  question  is  not  difficult.  First,  the  money  hoarded  in  the 
banks  does  not  belong  to  the  banks,  but  to  individuals.  Second, 
it  fails  to  circulate  because  of  general  falling  prices.  No  man  will 
invest  his  money  on  a  declining  market  if  he  can  help  it.  So  the 
money  lies  in  the  banks  waiting  for  prices  to  touch  bottom.  Third, 
now  if  some  one  will  put  in  operation  a  plan  by  means  of  which 
prices  will  cease  falling  and  commence  to  rise,  then  the  hoarded 
money  will  at  once  leave  the  banks  and  enter  into  active  circula- 
tion. 

It  is  a  fact  plain  to  every  thinker  and  student  of  history  that 
money  will  not  ciixulate  in  a  time  of  declining  prices.  On  the 
other  hand  it  can  not  be  prevented  from  circulating  during  a  time 
of  rising  prices.  This  statement  is  as  true  and  self-evident  as  is 
the  fact  that  water  does  not  naturally  run  up  hill,  but  uniformly 
runs  freely  down  hill.  Then  when  it  is  desired  that  money  should 
circulate  all  we  have  to  do  is  to  create  the  conditions  which  uni- 
formly insure  its  circulation. 

To  make  the  subject  very  plain,  I  wiU  state  it  in  the  form  of  an 

arithmetical  example  in  long  division,  thus: 

Divisor.  I  Dividend.  I  Quotient. 

Commodities.  |       Volume  of  money.       |         Average  prices. 

The  divisor  in  this  example  is  the  people  and  the  commodities 
they  have  for  sale.  The  dividend  is  the  volume  of  money  afloat 
to  do  business  with.  The  quotient  is  the  general  average  of 
prices.  Now,  it  is  a  fact,  that  the  people  and  commodities  of  this 
country,  and  the  people  and  commodities  of  the  money-using 

world,  are  increasing;  that  is  to  say,  the  divisor  in  our  example  ia 

i;r.2 


19 

continually  increasing.  This  being  so,  then  the  dividend,  or 
volume  of  money,  must  equally  increase,  or,  as  is  plain,  the  quo- 
tient must  decrease;  that  is,  the  general  average  of  prices  must 
continually  decline.  And,  as  already  seen,  as  long  as  prices  de- 
cline the  money  in  existence  vdll  not  circulate.  It  will  remain 
locked  up  in  the  banks  waiting  for  prices  to  touch  bottom.  The 
hoards  will  never  circulate;  the  enforced  idleness  of  labor  will 
continue.  Enforced  idleness  of  labor  means  public  distress,  which 
must  grow  worse  continually  until,  in  the  delii'ium  of  starvation, 
the  suffering  people  may  commit  unlawful  acts.  Then  to  keep  the 
peace  the  hungry  people  are  usually  suppressed  by  force;  in  other 
words,  if  we  do  not  adopt  the  just  and  civilized  plan  of  increasing 
the  volume  of  money  as  the  people  increase,  then  may  be  forced 
upon  us  the  unjust  and  savage  plan  of  reducing  the  divisor,  be- 
cause we  refuse  to  increase  the  dividend  as  the  divisor  grows. 

Our  true  remedy  in  the  matter  is  obvious.  We  can  double  tht 
money  of  ultimate  pavments  by  using  both  gold  and  silver  on  equal 
terms,  instead  of  gold  only.  And  then  the  metals  may  be  supple- 
mented vnth  legal-tender  Treasury  notes,  receivable  in  the  revenues 
of  the  Government,  but  not  otherwise  redeemable.  Such  a  money  is 
uniformly  as  good  as  the  issuing  Government,  and  in  our  case  that 
is  good  enough.  There  is  not  a  case  on  record  in  this  country  or  in 
England  where  a  full  legal-tender  Government  currency,  receiv- 
able in  the  revenues  of  the  issuing  Government,  has  fallen  below 
parvsdth  gold  coin;  but  on  the  other  hand  such  notes  have  usually 
been  preferred  to  coin. 

It  may  be  replied  to  what  I  have  here  said  that  the  money  of  the 
United  States  has  been  increasing  and  still  is  increasing  as  the  peo- 
ple and  their  commodities  increase;  that  the  monthly  Treasury 
reports  show  that  the  money  per  capita  is  as  gi-eat  or  greater  now 
than  ever  before. 

In  reply  to  that  position  I  desire  to  say,  with  all  due  deference 
to  the  Treasury  officers,  that  the  monthly  reports  do  not  state  all 
the  facts.  They  do  not  show  all  the  exports  of  gold  coin,  nor  the 
waste,  loss,  and  destruction  of  coins  and  notes.  The  late  Senator 
Plumb,  a  very  high  authority  on  this  subject,  stated  the  matter 
in  1888  as  follows: 

It  is  estimated  that  there  are  in  circulation,  including  that  which  is  locked  ui. 
1752 2 


20 

in  the  Treasury  and  held  in  the  bank  as  a  reserve  fund,  about  $1,600,000,000,  of 
all  kinds  of  currency  of  the  United  States,  gold  and  silver,  the  overplus  of 
gold  and  silver  certificates,  gi'eenback  notes  and  national  bank  notes,  all  told, 
and  there  are  more  than  $60,000,000,000  of  property  which  must  finally  be  meas- 
ured by  this  volume  of  currency.  It  has  been  contracted  during  the  last  year 
more  than  5  per  cent  in  addition  to  all  that  has  occurred  by  reason  of  abrasion 
and  loss.  No  man  can  tell  the  volume  of  greenbacks  outstanding.  Nominally 
it  is  $346,000,000  and  a  fraction,  but  that  volume  has  been  subject  to  all  the 
accidents  which  have  occurred  during  the  past  twenty-five  years,  whereby 
money  has  been  consumed,  worn  out,  lost,  and  it  is  doubtful  if  the  amount  is 
really  over  $300,000,000  to-day. 

In  June,  1890,  Senator  Plumb  continued  the  discussion  of  this 
subject,  as  follows: 

Let  us  see,  therefore,  how  much  money  is  available  for  actual  use  among 
the  people.  From  the  total  of  $1,560,000,000  arrived  at  as  above,  must  be  deducted 
an  average  of  $260,000,000  which  the  Treasury  keeps  on  hand,  and  about  which 
something  has  heretofore  been  said  in  the  debate  on  this  bUl,  and  that  leaves 
as  the  maximum  which  can  by  any  possibility  be  used  $1,300,00000,0.  There 
ought,  in  fairness,  to  be  deducted  from  this  $150,000,000,  error  in  estimate  of  gold 
in  the  country,  which  would  reduce  the  money  outside  the  Treasury  to  $1,150,- 
000,000.  From  this  is  to  be  subtracted  the  $600,000,000  as  a  reserve,  as  before 
computed,  leaving  a  balance  of  $550,000,000  which  is  available  for  delivery  or  use 
in  the  transaction  of  the  business  of  all  the  people,  or  a  trifle  over  $8  per  cap- 
ita. But  the  force  of  my  argument  is  not  materially  weakened  by  conceding 
the  gold  coin  to  be  as  estimated  by  the  Treasury  Department,  which  would 
leave  in  actual  circulation  $700,000,000.  In  order  to  make  up  this  amount  all 
doubt  must  be  resolved  in  favor  of  the  Treasury  and  against  the  people,  both 
the  doubt  as  to  the  amount  of  lost  and  destroyed  notes  and  that  as  to  the  gold 
supply. 

If  I  were  deciding  this  case  upon  what  I  consider  the  best  evidence,  I  would 
be  bound  to  say  that  I  believed  the  money  in  actual  circulation  did  not  much, 
if  at  all,  exceed  $500,000,000.  Upon  this  narrow  foundation  has  been  built  the 
enormous  structure  of  credit  of  which  I  have  spoken.  It  is  the  greatest  of 
the  kind  that  was  ever  built,  because  it  was  built  by  the  best  people  that 
ever  built  anything.  Over  twenty  thousand  millions  of  debts,  the  enormous 
and  widely  extended  business  of  65,000,000  people,  all  rest  upon  and  must  be 
served  by  a  volume  of  currency  which  must  seem  to  the  most  veteran  finan- 
cier as  absolutely  and  dangerously  small. 

Mr.  Speaker,  I  think  it  is  plain  to  every  candid  person  that  the 
monthly  Treasury  reports  are  false  and  misleading;  that  there  is 
no  such  increase  of  available  money  as  is  demanded  by  the  in- 
creasing numbers  and  needs  of  our  people.  It  is  only  on  this 
ground  that  we  can  explain  why  we  witness  hoarded  money,  de- 
clining prices,  enforced  idleness  of  labor,  and  general  distress 
among  the  people. 

Now  let  us  look  at  some  historical  examples.  At  the  close  of  the 
war  money  was  plenty  and  times  were  good.  In  18G6  a  law  was 
enacted  to  sell  registered  bonds  for  currency  and  to  cancel  the 
currency  by  burning.  This  at  once  caused  decreasing  money, 
falling  prices,  general  hoarding,  and  hard  times.     The  New  York 

17.32 


21 

clearings  ceased  to  increase  witli  an  increasing  population.  The 
hard  times  and  popular  discontent  caused  the  repeal  of  the  con- 
traction law  in  1868.  This  at  once  "  restored  confidence."  The 
hoarded  money  went  to  work  and  the  New  York  clearings  bounded 
up  from  twenty-eight  billions  in  1868  to  thirty-seven  bUlions  in 
1869.  But  as  there  was  no  actual  increase  in  money  correspond- 
ing to  the  increase  of  the  people  the  good  times,  founded  on  con- 
fidence only,  was  fitful  and  could  not  last. 

Then  came  the  law  of  1869,  making  the  currency  bonds  payable 
in  coin,  and  the  laws  of  1873-74,  demonetizing  silver.  This  caused 
hard  times,  as  is  plainly  shown  in  the  New  York  clearings.  In 
1875  was  enacted  another  contraction  law,  preparatory  for  specie 
payments.  This  intensified  the  public  distresses.  Anarchy  seemed 
imminent.  Pittsburg  was  partly  burned,  and  troops  were  called 
out  in  places  to  shoot  starving  people.  The  New  York  clearings 
indicated  the  situation,  and  were  smaller  in  1876  than  they  had 
been  since  1863.  Though  the  people  had  increased  about  a  dozen 
millions  in  ten  years,  yet  the  New  York  clearings  were  seven 
billions  less  in  1876  than  18G6. 

To  relieve  the  situation  Congress  passed  two  remedial  measures 
in  1878.  One  (May  31,  1878,)  forbade  the  further  retirement  of 
greenbacks;  the  other  authorized  the  coinage  of  over  $3,000,000 
per  month  of  silver,  to  be  added  to  the  cii'culation.  These  laws 
assured  the  holders  of  money  that  prices  had  touched  bottom, 
and  at  once,  as  if  by  magic,  the  hoarded  millions  of  money  in 
the  banks  was  at  once  checked  out  and  put  into  circulation.  The 
New  York  clearings  immediately  registered  the  good  times. 
They  bounded  from  twenty-two  and  a  half  billions  in  1878  to 
forty-eight  and  a  half  billions  in  1881. 

But  these  good  times  were  not  pleasing  to  the  banks.     In  1882 

there  was  afloat  $360,000,000  of  bank  currency.     By  1888  it  had 

been  reduced  to  less  than  $300,000,000.     This  contraction  caused 

falling  prices  and  hard  times.     The  New  York  clearings  promptly. 

noted  the  fact,  and  to  this  day  the  banks  have  not  loosened  their 

grip  on  the  currency  of  the  country.     Since  1880  our  population 

has  increased  nearly  30,000,000;  yet  the  New  York  clearing  house 

records  about  $15,000,000,000  less  business  per  annum  in  the 

nineties  than  in  1881. 
1752 


If  asked  how  we  may  dissipate  the  hoarded  money  from  the 
banks  and  set  it  to  circulate  the  answer  is  plain  and  certain: 

1.  Let  silver  be  remonetized  and  placed  on  an  equal  footing  with 
gold. 

2.  Let  there  be  issned  fifty  millions  of  greenbacks  to  replace  the 
lost  and  destroyed  notes,  in  accordance  with  the  intent  of  the  law 
of  May,  1878. 

3.  Let  there  be  issued  one  hundred  and  fifty  millions  of  green- 
backs to  replace  the  bank  currency  which  has  been  retired  since 
1882. 

4.  Let  all  newly  issued  notes  be  legal  tender  and  receivable  in 
Government  revenues,  but  not  otherwise  redeemable,  and  let  all 
new  notes  be  covered  into  the  Treasury  and  paid  out  in  the  lawful 
disbursements  of  the  government. 

These  issues  of  money  can  in  no  just  sense  be  considered  an  ' '  in- 
flation "  of  the  currency.  They  would  only  be  restoring  the  lost, 
wasted,  and  retired  currency  which  the  banks  and  the  Govern- 
ment considered  as  necessary  for  a  population  several  millions  less 
than  we  now  have. 

Mr.  Speaker,  the  policy  here  indicated  would  start  every  wheel, 
furnace,  pick,  spindle,  hammer,  and  plow  of  the  industries.  It 
would  employ  every  man,  woman,  and  child  able  to  work  in  all 
this  broad  land  at  good  wages.  There  would  be  no  longer  any 
necessity  to  increase  the  standing  Army  for  the  purpose  of  re- 
ducing the  population,  as  recently  intimated  by  the  General  of  the 
Army.  No,  sir;  but,  on  the  other  hand,  we  would  have  gbod 
times,  as  so  truly  described  by  Col.  R.  G.  IngersoU  prior  to  the 
contraction  of  the  currency.     The  colonel  said: 

On  every  hand  fortunes  were  being  made,  a  wave  of  wealth  swept  over  the 
United  States,  huts  became  houses,  houses  became  palaces,  tatters  became 
garments,  and  rags  became  robes;  walls  were  covered  with  pictures,  floors 
with  carpets,  and,  for  the  first  time  in  the  history  of  the  world,  the  poor 
tasted  of  the  luxuries  of  wealth.  We  began  to  wonder  how  our  fathers  en- 
dured life.    Every  kind  of  business  was  pushed  to  the  very  sky  line. 

Mr.  Speaker,  in  order  to  bring  out  of  its  hiding  the  money  that 
"Ues  locked  up  in  the  banks,"  it  is  not  necessary  to  start  any 
scheme  of  imlimited  currency  inflation,  but  merely  to  restore  the 
ancient  coin  of  the  world  as  it  has  existed  from  the  days  of  Abra- 
ham, and,  in  this  country,  until  1873;  to  reissue  the  lost  and  de- 
1752 


23 

stroyed  currency  since  1878,  in  the  form  of  new  greenbacks,  and 
then  to  gradually  increase  the  money  as  the  people  increase.  How 
easy  and  simple  this  would  be  if  the  money  changers  who  have  us 
by  the  throat  would  only  permit  it!  As  a  matter  of  hope  in  this 
line  I  am  glad  to  note,  recently,  some  symptoms  of  sound  policy, 
even  among  the  banks.  Once  in  a  while  some  of  the  bankers  open 
their  eyes,  and  begin  to  see  that  even  the  banks  could  do  more  and 
better  business  by  dealing  with  a  prosperous  people  than  they  are 
now  doing  by  skinning  the  dead.  Let  us  then  work  and  patiently 
hope  that  deliverance  may  yet  come  to  the  working  people  of 
America  and  of  the  world. 

IVIr.  Speaker,  I  am  utterly  opposed  to  the  currency  bill  now  be- 
fore the  House.  I  am  opposed  to  any  and  every  bill  which  enables 
the  banks  to  usurp  the  rights  and  powers  of  the  General  Govern- 
ment in  the  matter  of  supplying  a  sound  and  stable  currency  for 
the  use  of  the  people.  Through  such  a  measure  there  can  be  no 
permanent  relief  or  prosperity  for  the  country. 

But,  sir,  a  measure  in  accordance  with  the  platforms  of  Jeffer- 
son, Jackson,  and  Benton,  so  often  approved  by  a  general  vote  of 
the  people  at  the  Presidential  elections  from  1830  to  1860,  giving 
us  the  standard  coins  of  gold  and  silver,  supplemented  by  legal- 
tender  Treasury  notes,  will  afford  instant  relief,  with  assured  and 
permanent  prosperity.  Sir,  in  the  light  of  aU  monetary  history 
and  in  accordance  with  the  principles  of  equal  justice,  there  is  no 
other  certain  and  safe  policy  for  the  relief  of  the  country's  dis- 
tresses. 

Already  our  civilization  shows  symptoms  of  distress  and  de- 
cadence. Through  shrinking  money  and  falling  prices,  industry 
is  stagnant,  bankruptcies  are  increasing,  debts  and  taxes  are  be- 
coming more  burdensome;  families  are  losing  their  homes  through 
foreclosures  and  forced  sales;  able-bodied  men  by  millions  are 
tramping  and  begging  for  bread;  women  and  children  are  famish- 
ing for  the  want  of  food,  raiment,  and  shelter;  mothers  and  little 
ones  infest  the  streets,  or  retreat  into  loathsome  dens  and  slums, 
no  longer  able  to  live  otherwise;  churches  and  schools  are  lan- 
guishing for  lack  of  money,  the  revenues  of  colleges  and  great 
universities  feel  the  stringency  of  the  times,  and  teachers  and  pro- 
fessors are  dismissed  because  of  insufficient  funds  to  meet  expenses. 

1753 


Ii4 

I  wonder  that  gentlemen  have  not  observed  these  threatening 
sjTnptoms  of  social  decadence. 

Rome  experienced  the  same  distresses  through  the  failure  of 
the  gold  and  silver  mines  of  Greece  and  Spain.  Roman  society 
was  disintegrated,  and  the  population  of  Europe  fell  off  one-half. 
The  history  of  those  times  is  very  painful  to  read.  The  Christian 
civilization  of  the  present  day  is  entering  the  penumbra  of  the 
same  eclipse  which  darkened,  distressed,  and  decimated  Europe 
for  a  thousand  years.  Relief  came  through  the  discovery  of  the 
American  mines,  expanding  money  and  rising  prices  for  labor  and 
its  products.  An  expansive  money  system  is  the  chief  remedy  in 
such  cases.  With  the  broad  and  safe  basis  of  legal  tender,  we 
may  at  once  have  increasing  money  and  rising  prices.  This  will 
give  quick  and  lasting  relief.  Theories  of  distress  wiU  cease;  the 
recuperation  of  society  will  begin;  the  burden  of  debts  and  taxa- 
tion will  gradually  wear  away;  and  our  Christian  civilization  and 
free  institutions  will  be  preserved.  Popular  enlightenment  is  the 
necessity  of  the  hour.  Patient,  earnest,  and  persistent  work  in 
spreading  the  light  among  men  is  the  duty  of  every  patriot. 

1752 


The  Currency — Condition  of  tlie  Treasury. 


SPEECH 

OF 

HON.  NELSON   DINGLE  Y,  JR., 

OF  MAINE, 

In  the  House  of  Eepresentatives, 

Friday,  January  4,  1895. 

The  House  being  in  Committee  of  the  Whole  on  the  state  of  the  Union,  and 
having  under  consideration  the  bill  (H.  R.  8149)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion upon  certain  conditions,  and  for  other  purposes — 

Mr.  DINGLEY  said: 

Mr.  Chairman:  The  pending  bill  proposes  two  important  ob- 
jects: First,  a  radical  revision  of  tbe  banking  system  of  the  United 
States  and  a  readjustment  of  oiir  currency;  and,  second,  the  relief 
of  the  necessities  of  the  Federal  Treasury. 

Perhaps  I  should  reverse  the  order  in  which  I  have  stated  the  two 
objects,  because  nearly  every  gentleman  who  has  advocated  the 
passage  of  this  bill,  from  the  Secretary  of  the  Treasury  down,  has 
presented  as  the  main  consideration  for  its  passage  the  claim  that 
it  would  relieve  the  necessities  of  the  Treasury. 

It  must  be  admitted  that  both  these  objects  are  important,  the 
relief  of  the  necessities  of  the  Treasury  being  pressing  and  imme- 
diate, while  the  remodeling  of  the  banking  system  and  of  the  cur- 
rency may  be  deferred.  Indeed,  it  may  be  deferred  for  the  time 
being  vrithout  any  injury,  for  the  reason  that  it  is  conceded  by 
all  gentlemen  acquainted  with  the  finances  of  this  country  that 
for  the  present  at  least,  while  the  business  of  the  country  is  so  de- 
moralized, we  have  more  currency  than  we  are  using.  At  every 
great  center  in  this  country  there  is  lying  idle  to-day  a  large  vol- 
ume of  existing  currency  unused — unused  because  there  is  no 
profit  in  its  use.  Business  is  impaired  and  the  consumption  of 
the  country  has  declined  nearly  one-third.  When  business  shall 
revive,  as  we  hope  it  will  at  an  early  day,  then  we  shall  need 
1733  1 


more  currency  undoubtedly.  And  at  an  early  day  there  should 
be  provision  for  such  an  amendment  of  our  banking  laws  as  will 
meet  this  demand  when  it  shall  come. 

But  the  pressing  need  for  legislation  on  the  part  of  this  Congress 
to-day  is  in  reference  to  the  relief  of  the  present  necessities  of  the 
Treasury  of  the  United  States. 

Now,  if  this  bill  wtII  relieve  the  necessities  of  the  Treasury  Oi 
the  United  States,  so  far  it  maj^  commend  itself  to  us.  I  have  been 
listening  to  this  discussion  from  the  beginning  with  considerable 
interest,  becaiise  I  have  looked  upon  it  as  a  i)xirely  business  ques- 
tion. From  my  point  of  view  there  is  no  partisanship  that  should 
be  involved  in  the  consideration  of  such  a  question  as  this.  What 
is  sound  and  conducive  to  the  prosperity  of  this  country,  for  j^our 
interest  and  mine,  is  a  pitrely  business  question;  and  I  am  not 
disposed,  notwithstanding  the  reflections  on  the  Republican  party 
that  we  have  had  to  such  an  extent  from  some  gentlemen  on  the 
other  side,  to  depart  in  the  consideration  of  this  question  from 
a  strictly  business  ijoint  of  view. 

When  the  gentleman  from  Kentucky  [Mr.  McCreary]  was 
speaking  yesterday  he  declared  that  unless  this  bill  should  be 
passed  before  adjournment  it  would  become  necessary  within 
one  3'ear  to  issue  from  one  hundred  to  one  hundred  and  fifty  mil- 
lions of  dollars  additional  bonds.  I  felt  an  interest  in  ascertain- 
ing how  that  would  be  affected  by  the  passage  of  this  bill,  because 
I  was  seeking  light,  and  I  asked  the  gentleman  to  explain  how  it 
was  that  if  this  bill  should  pass  it  would  change  in  a  single  iota 
the  necessity  for  the  issue  of  bonds.  You  heard  the  response.  It 
was  not  satisfactory  to  me,  however  it  may  have  been  to  you. 

I  have  been  listening  from  the  beginning  of  this  discussion  for 
an  answer  to  that  query:  How  will  the  passage  of  this  bill  relieve 
the  present  necessities  of  the  Treasury?  And  I  think  that  gentle- 
men who  siipport  this  bill  should  give  clearly  to  this  House  an 
answer  to  this  question  before  we  give  our  assent  to  its  passage. 

THE  DEFICIENCY  IN  THE  TREASURY. 

Now,  what  are  the  difficulties  which  surround  the  Treasury  of 
the  United  States?  First,  in  the  past  eighteen  months  the  revenue 
has  so  declined  below  the  expenditures  that  we  have  a  deficiency 
of  almost  §100,000,000,  or,  to  speak  more  precisely,  $98,500,000. 
Every  month  for  eighteen  months  this  state  of  things  has  been  go- 
ing on,  and  within  the  last  three  months,  from  the  1st  of  October 
to  the  1st  of  Januarj',  notwithstanding  there  has  been  placed  upon 
the  statute  book  a  new  revenue  measure,  which  was  enacted  to 
raise  more  revenue,  the  deficiency  has  been  over  $28,000,000 — one- 
third  more  than  in  the  same  period  of  1893. 

Now,  Mr,  Chairman,  no  country  on  the  face  of  the  earth  can 
retain  the  confidence  of  its  own  people  or  of  the  commercial  world 
if  it  suffers  such  a  state  of  things  to  continue  and  become  chronic. 
For  eighteen  months,  while  this  House  has  been  in  existence,  with 
this  ever-recurring  deficiency  in  our  Treasury,  we  have  failed  to 
take  practical  measures  to  make  the  revenue  in  that  period  equal 
to  necessury  expenditures.  The  Government  of  Great  Britain, 
even,  could  not  have  a  constant  deficiency  like  this  and  maintain 
its  credit.  The  Government  of  France  can  not  do  it.  Italy  has 
been  attempting  something  similar  in  the  last  two  years,  and  has 
come  to  grief,  as  might  be  expected. 
1733 


Now,  in  my  judgment,  Mr.  Chairman,  the  foundation  of  all  our 
financial  difBculties  lies  right  here.  I  will  not  enter  into  a  dis- 
cussion of  the  question  as  to  what  has  caused  this  falling  off  of 
revenue.  I  simply  point  to  the  fact  that,  after  constantly  main- 
taining reveniie  at  a  point  that  met  current  peace  expenditures 
every  year  from  1861  to  1893,  commencing  vnth  the  latter  year  we 
have  had  a  continuous  deficiency  for  eighteen  months,  and  one 
that  is  likely  to  be  continuoiis  for  the  next  six  months.  And  the 
fact  that  this  has  existed  so  long  has  carused  a  disturbed  financial 
situation  in  this  country,  which  has  affected  us  in  every  direction, 
even  the  private  business  of  our  70,000.000  of  people. 

And  I  may  remark,  parenthetically,  that  the  statement — so  fre- 
quently made  on  the  other  side — that  this  deficiency  has  been 
caused  by  the  tariff  legislation  of  1890,  is  disproved  by  the  fact 
that  for  three  years  after  that  legislation  was  enacted — viz,  in  the 
fiscal  years  ending  June  30, 1891, 1892,  and  1893 — the  revenue  under 
that  law,  notwithstanding  it  surrendered  nearly  sixty  millions  per 
annum  by  the  aboHtion  of  the  duty  on  raw  sugar,  was  ample  each 
year  to  meet  the  current  expenditures  and  pay  the  interest  on  the 
public  debt,  including  pensions,  and  leave  a  surplus  each  year, 
and  that  it  was  only  after  its  repeal  had  been  determined  upon 
and  it  was  understood  that  another  and  revolutionary  policy  was 
to  be  substituted,  that  a  deficiency  appeared. 

Now,  in  my  judgment,  we  shall  not  have  any  marked  revival  of 
confidence  nor  any  noteworthy  revival  of  business  until  the  Grov- 
ernment  of  the  United  States  sets  the  example  of  providing  reve- 
nue equal  to  its  expenditures.  There  are  peculiar  circumstances 
that  make  this  specially  necessary  in  our  case.  As  has  already 
been  said  in  the  progress  of  this  debate,  we  are  undertaking  to  do 
not  only  the  legitimate  work  of  Government,  but  we  are  also  under- 
taking to  do  a  banking  business  on  the  largest  scale  ever  known. 
Who  ever  heard  of  a  bank  or  any  fiduciary  institution  maintain- 
ing the  confidence  of  its  customers  when  every  month  its  revenue 
was  less  than  its  expenditures?  And  if  possible,  confidence  in  the 
finances  of  iit  government  is  more  dependent  on  the  raising  of  reve- 
nue that  meets  the  ordinary  expenditures  of  a  peace  establishment 
than  it  is  in  the  case  of  the  individual. 

Now,  then,  the  first  question  that  I  asked myseK  and  now  ask  the 
committee — because  I  consider  that  as  vital  in  any  measure  that 
promises  to  restore  confidence  in  the  finances  of  the  Government 
and  of  the  country — is.  Does  this  bill  in  any  way  tend  to  make  the 
revenue  equal  to  expenditures?  Will  any  gentleman  inform  me, 
and,  if  so,  how?  It  is  evident  that  it  does  not.  It  does  not  touch 
the  question,  even.  Well,  if  it  does  not,  how  is  the  passage  of  the 
bill  going  to  restore  confidence  in  the  finances  of  the  Government 
and  in  the  business  of  this  country? 

If  there  were  in  this  bill  a  proposition  to  raise  more  revenue,  a 
proposition  that  ought  to  have  been  presented  to  this  House  and 
passed  long  ago  to  make  up  this  deficiency,  that  would  be  a  ground 
for  a  restoration  of  confidence.  You  will  impart  no  confidence  by 
legislation  until  you  do  that,  or  bring  revenue  up  to  the  point  of 
expenditu^res. 

Ah,  but  it  is  said  that  after  the  first  of  next  July,  when  this 
fiscal  year  is  over,  then  we  hope  existing  laws  will  give  us  revenue 
sufficient.  That  may  or  may  not  be  the  case.  But  what  are  you 
1733 


going  to  do  in  the  meantime?  You  have  run  on  hope  for  eighteen 
months,  and  "  hope  deferred  maketh  the  heartsick."  Is  it  not 
about  time  to  have  some  fruition?  Indeed,  in  view  of  the  fact 
that  your  new  reventie  law  failed  in  the  last  thi-ee  months  to  pay 
the  expenses  by  over  $28,000,000,  there  is  no  doubt  it  will  fail  for 
the  next  three  months  to  the  extent  of  many  millions;  and  by  the 
time  the  income  tax  shall  begin  to  come  in,  which  it  will  not 
until  about  the  15th  of  June,  you  will  have  added,  between  the 
1st  of  January  and  the  15th  of  June,  perhaps,  $30,000,000  more 
to  your  deficiency;  and  yet  a  bill  which  does  not  propose  to  raise 
a  dollar  of  additional  revenue  is  presented  as  something  which 
will  relieve  the  necessities  of  the  Treasury. 

It  is  true  that  there  are  some  peculiar  circumstances  that  have 
prevented  the  tariff  act  of  August  28  last  from  yielding  the  rev- 
enue that  it  was  expected  to  do  during  this  fiscal  year.  In  the 
first  place  it  gave  sufficient  notice  to  all  the  whisky  distillers  in 
the  land  that  there  was  to  be  an  increase  of  20  cents  per  gallon  in 
the  tax,  so  that  every  one  of  them  took  out  of  bond  and  paid  the 
old  tax  on  a  siifl&cient  amount  to  carry  the  country  through  for 
perhaps  this  year. 

Then,  again,  when  you  put  a  duty  of  40  per  cent  upon  raw  sugar 
ample  opi)ortunity  was  given  to  the  sug^r  trust  to  import  raw 
sugar  sufficient  to  carry  the  country  through  nearly  a  year  before 
the  dvLty  on  sugar  took  effect;  and  notwithstanding  legitimately 
you  should  have  had  $10,000,000  of  revenue  within  the  last  quarter 
from  the  sugar  tax  you  had  less  than  $2,000,000.  I  am  glad,  for 
one,  that  the  sugar  trust  has  not  made  anything  out  of  this  grab. 
They  imported  so  much  raw  sugar  that  they  broke  the  market,  and 
they  have  not  as  yet  been  able  to  raise  the  price  of  sugar  to  accord 
with  the  increase  of  the  duty.  They  will  do  it,  however,  as  soon  as 
this  stock  is  exhausted. 

Then  there  was  that  most  absurd  piece  of  legislation  ever  en- 
acted, the  extension  for  five  years  of  the  period  during  which 
whisky  coiild  remain  in  bond  to  age  and  become  more  valuable, 
without  pajdng  the  tax — the  Grovernment  losing  the  wastage  as 
well  as  the  interest  on  the  deferred  tax.  The  result  is  that  instead 
of  whisky  coming  out  of  bond  at  the  present  time  and  paying  the 
tax  that  would  have  been  paid  without  this  legislation,  the  Gov- 
ernment is  issiiing  bonds  on  which  it  is  paying  interest,  that  the 
whisky  distillers  ought  to  have  paid. 

It  is  such  legislation  as  this  that  is  making  our  deficiency  under 
the  new  tariff.  It  is  done  and  can  not  be  remedied ;  but  it  is  within 
the  power  of  this  Congress,  within  ten  days,  to  put  upon  the  stat- 
ute book  an  act  that  will  add  $30,000,000  to  the  revenues  of  this 
country  without  disturbing  anybody  that  ought  not  to  be  disturbed. 
Yet  we  fritter  away  our  time  here,  amusing  ourselves  with  the 
idea  that  we  are  going  to  relieve  the  Treasury  by  passing  this  bill 
when  its  passage  would  do  nothing  of  the  kind. 

THE  RUN  ON  THE  GOLD  REDEMPTION  FUND. 

Now,  Mr.  Chainnan,  there  is  another  diflficulty  which  the  Treas- 
ury has  to  encoimter,  and  I  want  to  ask  whether  this  bill  meets 
that.  That  is  the  fact  that  during  the  last  two  years  there  has 
been  a  run  on  the  gold  redemption  fund  by  the  holders  of  United 
States  notes  and  Treasury  notes  presenting  them  for  payment. 
1733 


Here  are  the  official   figures  of  redemption  for  each  year  since 
1879: 


United  States  notes  and  Ti-easfuiry  notes  redeemed  in  gold,  by  calendar  years. 

Year. 

United 
States  notes. 

Treasury 
notes. 

Total. 

1879 - 

Ill,  4.56,  ,5.36 

54;;},  800 

28, 7.50 

115,000 

$11, 456,  ,536 

1880 

54;i  800 

1881  - - - 

28, 7,50 

1883 

115,000 

1883        - 

1884 

810,  (X)0 

3,927,400 

9,349,507 

1,339.945 

475, 181 

959. 548 

3;^9,273 

9,016,737 

1.5, 96;:},  813 

44,493,513 

123,941,059 

810,000 

1885               

3,937,400 

1886 

9, 349,  ,507 

1887                               .                             ..   . 

1,3:39.945 

1888 

475, 181 

1889 

9,59,, 548 

1890 

3:39, 373 

1891 

$686, 8TO 
20,296,747 
32,063,778 
17,803,944 

9, 70:3,  .597 

1892        

36, 3150,  .560 

1893 

76.5,56,390 

1894                      

141.744,003 

Total 

331,760,051 

70,849,339 

293,609,390 

Within  the  last  two  years  it  appears  that  $218,000,000  of  legal- 
tender  demand  notes  (the  volume  of  outstanding  greenbacks  be- 
ing $346,000,000,  and  of  Treasury  notes  $1.53,000,000)  have  been  pre- 
sented to  the  Treasury  for  redemption  in  gold,  and  have  been 
redeemed;  and  on  being  redeemed  have  been  reissued,  and  are 
coming  up  again  and  again  to  the  Treasury  unless  confidence  shall 
be  restored.  Between  October  1  and  January  1  of  the  past  year 
$42,753,657  were  redeemed — nearly  $33,000,000  in  December. 

On  the  1st  of  March,  1893,  there  was  in  the  gold  redemption  fund 
$107,000,000.  This  fund  had  been  maintained  at  a  minimum  limit 
of  $100,000,000,  frequently  reaching  $130,000,000,  since  the  resvimp- 
tion  of  specie  pajinent  in  1879,  and  not  one  hour  had  it  been  suf- 
fered to  fall  below  that  minunum;  and  during  that  time,  iip  to 
1893,  very  few  legal -tender  demand  notes  had  been  presented  for 
payment. 

Perfect  confidence  has  been  maintained — maintained  simply 
because  the  Grovernment  of  the  United  States  having  a  revenue 
greater  than  its  expenditure,  and  having  a  gold  redemption  fund 
maintained  at  a  minimum  of  $100,000,000,  everybody  had  perfect 
confidence  that  if  he  should  go  to  the  Treasury  at  any  time  with 
a  legal-tender  demand  note  he  could  obtain  payment,  and  having 
that  confidence  he  preferred  the  note  to  the  gold.  Confidence  in 
matters  of  this  kind  is  a  very  peculiar  thing  and  we  have  to  deal 
v^^th  it  as  we  find  it. 

I  remember  hearing  of  an  excellent  citizen  who,  ha\^ng  heard 
a  flying  rumor  that  a  savings  bank  in  which  he  had  a  deposit  had 
failed,  at  once  rushed  to  the  bank.  When  he  got  into  the  bank- 
ing room  he  threw  down  his  deposit  book  and  said,  "  I  want  my 
money."  The  treasurer  of  the  bank  at  once  went  to  his  cash 
drawer  and  proceeded  to  count  out  the  money,  and  when  he  had 
got  it  and  counted  it  to  see  that  the  amount  was  correct  the  old 
Quaker,  looking  somewhat  nonplussed,  said,  "Well,  thee  has  the 
money,  has  thee?"  "Of  course  we  have, "replied  the  bank  officer. 
1733 


"  Well,  if  thee  has  it,  I  don't  want  it;  but  if  thee  hasn't  the  money, 
I  want  it  right  off."  [Langhter.]  Now,  that  illustrates  this  mat- 
ter of  confidence.  So  long  as  you  can  maintain  perfect  confidence 
that  an  institution  or  government  will  redeem  its  promises  on  de- 
mand, there  is  no  question  about  them;  but  to  maintain  such  con- 
fidence you  must  have  some  reality  as  a  basis.  It  is  not  a  ques- 
tion of  mere  faith  in  somebody.  The  confidence  must  be  l)ased  on 
the  actual  existence  of  a  fund  that  can  be  used  at  a  moment's 
warning,  and  also  upon  perfect  confidence  in  the  promisor;  and, 
in  the  case  of  a  government,  based  also  on  the  fact  that  its  reve- 
nues exceed  its  expenditures. 

Now,  as  I  have  said,  from  1879  to  1893  our  Treasury,  preserving 
the  conditions  which  give  confidence,  namely,  a  revenue  larger 
than  the  ex]ienditure,  and  a  gold  redemption  fund  never  allowed 
to  fall  a  dollar  Ix'low  what  the  public  believed  to  be  the  minimum 
point  of  safety,  had  no  demand  for  gold.  But  the  moment  those 
conditions  changed  and  public  confidence  was  disturbed,  no  mat- 
ter for  what  cause,  then  people  immediately  began  to  discover 
that  they  had  great  need  for  gold,  and  there  has  consequently  been 
a  run  iipon  the  gold  redemption  fund  during  the  past  two  years 
to  the  extent  of  §218,000,000,  which  could  not  be  met  by  the  gold 
revenue  from  customs.  In  short,  notwithstanding  the  issue  of 
$100,000,000  of  5  per  cent  bonds,  yielding'$117,000,000,  the  gold  re- 
demption fund  fell  at  one  time  to  $52,000,000,  and  it  is  now  only 
$80,000,000. 

And,  Mr.  Chairman,  I  ask  again  what  does  this  bill  do  vnth  ref- 
erence to  meeting  the  necessities  of  the  Treasury  in  that  direction? 
I  have  pointed  out  that  it  does  not  provide  more  reventie.  When 
any  individual  finds  that  he  has  not  sufficient  revenue  to  meet 
his  paper  as  it  matures,  if  he  has  credit  and  does  not  propose 
to  repudiate  and  go  into  bankruptcy,  he  goes  out  and  borrows, 
does  lie  not?  Is  there  any  other  way?  Is  there  any  other  way  for 
a  man  or  for  a  Government  to  pay  debts  at  maturity,  when  for 
the  time  being  there  is  not  sufficient  revenue  to  do  it,  than  to  go 
out  and  borrow?  I  do  not  know  of  any  other.  I  have  heard,  of 
course,  of  the  John  Law  method  of  obtaining  money  which  was 
resorted  to  in  times  past,  biit  it  never  has  worked  successfully  and 
it  never  will  work  successfully.  Now,  the  Government  of  the 
United  States  during  the  past  eighteen  months  has  not  had  suf- 
ficient revenue  to  meet  its  expenditures,  and  what  must  it  do? 

There  was  but  one  thing  to  do  in  the  absence  of  revenue  and  the 
neglect  of  Congress  to  pro\'ide  for  more  revenue,  and  that  was  for 
the  Government  to  go  out  and  borrow.  Do  gentlemen  know  of 
any  other  patent  method?  I  do  not.  I  have  noticed  in  the  papers 
that  til  ere  have  been  bodies  of  people  meeting  to  protest  against 
the  issue  of  interest-bearing  bonds  in  time  of  peace.  It  is  all  well 
enough  to  resolve,  but  do  those  people  act  upon  that  principle  in 
their  own  business?  If  they _^  have  not  revenue  sufficient  to  pay 
their  bills  as  they  mature  are  they  not  flying  around  trying  to 
boiTOW  of  someliody?  I  do  not  know  how  it  may  be  with  the  rest 
of  you,  but  that  is  what  I  have  to  do,  unless  I  propose  to  repudi- 
ate and  go  into  bankruptcy. 

Now,  if  the  revenue  has  been  less  than  the  expenditures,  as  it 
has  been  during  the  past  eighteen  months  to  the  extent  of  $98,- 
500,000,  then,  in  order  to  meet  our  obligations  as  they  mature,  we 
1733 


nrnst  go  out  and  borrow.  Is  there  any  doubt  about  that?  la 
there  any  other  way  of  carrying  on  this  Government?  Now,  there 
is  not  a  line  on  the  statute  book  that  authorizes  the  Secretary  of 
the  Treasury  to  issue  bonds  to  meet  a  deficiency  in  the  Treasury; 
not  a  line.  For  the  past  two  years  he  has  been  asking  Congress 
to  enact  a  law  giving  him  authority  to  issue  a  low-interest  bearing 
bond  to  meet  this  deficiency  and  maintain  the  gold  redemption 
fund,  but  you  have  refused  to  do  it,  and  the  Seci-etary  of  the 
Treasury  has  in  the  meantime  been  whipping  the  devil  around 
the  stumj)  trying  to  meet  the  deficiency.  What  has  he  been  doing? 
He  has  turned  to  the  act  of  1875,  which  authorizes  the  issue  of  5 
per  cent  ten-year  bonds,  for  the  purpose  of  maintaining  the  re- 
demption fund,  and,  under  the  plea  of  maintaining  that  fund,  he 
has  used  the  money  in  very  large  part  to  meet  the  deficiency,  and 
I  do  not  condemn  him  for  doing  it.  If  I  had  been  in  the  same 
position  I  would  have  done  exactly  the  same  thing.  Saliis  popuU 
suprema  lex. 

Mr.  BRYAN.  Do  I  understand  the  gentleman  to  say  that  the 
Secretary  of  the  Treasury  has  asked  for  authority  to  issue  a  bond 
for  the  purpose  of  obtaining  money  to  pay  the  expenses  of  the  Gov- 
ernment ? 

Mr.  DINGLEY.     I  so  understand. 

Mr.  BRYAN.  I  thought  his  request  had  been  for  authority  to 
issue  gold  for  redemption  purposes. 

Mr.  DINGLEY.  I  think  his  request  has  been  for  both.  There- 
need  be  no  misunderstanding  aboiit  that.  He  must  have  the 
authority  for  both  purposes.  I  am  not  going  to  condemn  the  Sec- 
retary of  the  Treastiry  for  straining  the  law  of  1875. 

Mr.  BOUTELLE.  He  has  authority  to  issue  bonds  for  redemp- 
tion purposes  now. 

Mr.  DINGLEY.  He  has  atithority  to  issue  bonds  for  redemp- 
tion purposes,  and  yet  we  have  had  $98,500,000  of  deficiency,  and 
the  money  which  he  has  obtained  ostensibly  for  the  redemption 
fund  has  been  used  in  i^art  in  meeting  that  deficiency  in  the  Treas- 
ury. There  was  no  other  course  open  to  the  Secretary  unless  he 
proposed  to  have  this  Government  go  to  protest,  and  I  woiild  not 
vote  to-day  to  condemn  him  for  taking  the  course  that  he  did 
take.    The  Government  must  be  preserved. 

But  I  do  condemn  this  HoiTse  and  Congress  for  not  giving  him 
plain,  clear  authority  to  issue  bonds  bearing  not  more  than  8  per 
cent  interest,  for  the  double  purpose  of  meeting  any  deficiency  in 
the  Treasury  and  of  maintaining  the  gold  redemption  fund,  in 
consequence  of  which  failure  he  has  been  obliged  to  issue  5  per 
cent  ten-year  bonds  at  great  disadvantage  and  cost  to  the  country, 
when  he  might  have  made  a  loan  at  2^  per  cent  if  we  had  given 
him  authority  to  do  so.  Now,  if  private  individuals  should  run 
their  business  in  that  way,  I  think  they  would  come  to  ruin  very 
soon. 

Mr.  BLAND.     May  I  ask  the  gentleman  a  question  right  there? 

Mr.  DINGLEY.     Yes,  sir. 

Ml'.  BLAND.  Since  the  gentleman  has  criticised  the  action  of 
the  House  upon  this  question— he  and  I  may  differ  as  to  the  pro- 
priety of  the  measure  of  which  I  am  about  to  speak,  biit  certainly 
we  did  pass  a  bill  which  would  have  given  the  Treasury  at  least 
$50,000,000  of  revenue,  a  bill  which  was  vetoed, 
1733 


8 

Mr.  DINGLEY.     To  what  does  the  gentleman  refer? 

Mr.  BLAND.  I  refer  to  the  seigniorage  hill,  which  proposed 
to  turn  over  t«  the  Treasury  $.55,000,000.  a  hill  which  was  vetoed. 

Mr.  DINGLEY.  Oh,  that  would  have  made  .the  difficulty 
greater  by  increasing  distrust,  as  it  would  have  taken  away  part 
of  the  bullion  behind  the  Treasury  notes  and  used  it  to  pay  cur- 
rent expenses. 

Mr.  BLAND.  I  said  that  perhaps  the  gentleman  and  I  might 
perhaps  differ  as  to  the  propriety  of  the  measure. 

Mr.  DINGLEY.  If  that  1)111  had  been  passed,  tlie  Treasury,  in- 
stead of  haiang  one  hundred  and  forty-one  millions  of  demand 
notes  to  redeem  the  past  year,  would  have  had  many  more;  and 
instead  of  two  bond  issues  we  should  have  had  several  more. 

Mr.  BLAND.  That  may  be;  but  the  gentleman  was  talking 
about  deficiencies  in  the  Treasury  and  the  issue  of  bonds  to  meet 
those  deficiencies. 

Mr.  DINGLEY.  The  measure  to  which  the  gentleman  refers 
was  simply  robbing  Peter  to  pay  Paul;  that  was  all  there  was  of  it. 

Mr.  BLAND.     You  are  robbing  both  by  this  means. 

Mr.  CHILDS.  There  is  one  question  I  should  like  to  a.sk  the 
gentleman  from  IMaine.  He  has  said  that  he  woiild  authorize  the 
Secretary  of  the  Treasury  to  sell  a  3  per  cent  bond 

Mr.  DINGLEY.  A  bond  bearing  interest  not  exceeding  3  per 
cent. 

Mr.  CHILDS.  For  the  double  purpose  of  providing  a  redemp- 
tion fund  and  of  meeting  the  current  expenses  of  the  Government. 
I  should  like  to  ask  him  how  long  he  would  have  that  condition  of 
things  continue? 

Mr.  DINGLEY.  I  have  already  said  that  if  I  could  have  my 
way  in  reference  to  this  matter  the  first  thing  I  woiild  do,  con- 
currently with  conferring  this  authority  to  issue  bonds,  would  be 
to  take  measures  to  make  the  revenue  equal  to  the  expenditure. 
I  consider  that  a  primary  duty.  [Applause  on  the  Republican 
side.]  But  exigencies  are  liable  at  any  time  to  arise  during  which 
the  revenue  may  not  be  equal  to  the  expenditure;  and  the  Sec- 
retary of  the  Treasury  ought  to  have  authority  to  meet  such  exi- 
gencies at  all  times,  esijecially  now  that  such  an  exigency  is  upon 
us.  I  agree,  however,  entirely  with  my  friend  that  the  idea  of 
issuing  bonds  to  maintain  a  chronic  deficiency  is  one  which  can 
not  be  entertained  for  a  moment.  This  deficiency  has  been  run- 
ning eighteen  months;  and  it  has  grown  to  be  pretty  chronic.  If 
there  is  any  measure  which  gentlemen  who  control  this  House 
ought  to  adopt  it  is  one  to  immediately  provide  revenue  sufficient 
to  meet  expenditures,  so  this  deficiency  may  not  continue.  This 
ought  to  have  been  done  a  year  ago. 

The  trouble  was  that  the  tariff  act  of  August  28, 1894,  was,  in  all 
except  three  respects,  a  revenue-destrojing  measure,  not  a  reve- 
nue-raising measiire.  In  three  respects  onlj'  was  it  a  measure  to  in- 
crease revenue — the  imposition  of  40  per  cent  duty  iipon  raw  sugar, 
the  levj-ing  of  20  cents  additional  tax  upon  whisky,  and  the  im- 
position of  the  income  tax,  from  which  we  shall  receive  no  benefit 
until  the  beginning  of  the  next  fiscal  year.  In  almost  every  other 
respect  tliat  bill  was  a  revenue-destroj'ing  measure. 

Now,  Mr.  Chairman.  I  was  inciuiring  what  there  is  in  this  bill 
which  wotild  aid  in  maintaining  a  redemi)tion  fund.  There  is  no 
1733 


9 

provision  for  more  revenue.  There  is  no  provision  for  the  issue 
of  a  bond  bearing  interest  not  exceeding  3  per  cent.  To  maintain 
that  fund,  if  it  is  to  be  maintained,  the  Secretary  of  the  Treasury 
must  go  on,  so  far  as  we  have  had  any  legislation  up  to  date, 
issuing  an  antiquated  5  per  cent  ten-year  bond  at  great  disadvan- 
tage and  cost  to  the  Treasury  w^hen  a  2^  per  cent  bond  could  be 
floated  the  moment  it  is  understood  that  this  nation  proposes  to 
have  revenue  sufficient  to  pay  its  expenses.  There  is  nothing  of 
that  kind  in  this  bill. 

How  is  it  supposed,  then,  that  this  bill  is  going  to  aid  in  main- 
taining a  redemption  fund?  In  two  directions  it  is  argued  it  may 
do  so.  First,  it  is  said  that  so  far  as  the  banks  avail  themselves 
of  the  provisions  of  this  measure  for  reorganization  they  will  be 
required  to  deposit  30  per  cent  of  the  circulation  they  take  out  in 
legal-tender  notes — not  to  be  canceled  of  course — to  be  held  there 
as  long  as  the  bank  has  the  circulation  outstanding.  In  addition 
to  that  it  is  provided  that  the  surplus  reveniie  shall  be  used  for 
the  purpose  of  calling  in  and  canceling  the  legal-tender  notes  to 
the  extent  of  70  per  cent  of  the  increase  of  bank  currency.  Now, 
this  last  provision,  in  view  of  what  has  been  going  on  for  eighteen 
months  past,  will  certainly  not  afford  us  a  great  deal  of  relief 
within  the  life  of  some  of  us  who  are  now  living — certainly  not 
for  a  year.  It  does  not  meet  the  present  exigencies  at  all.  And 
as  to  the  deposit  provision  of  the  bill,  it  is  to  be  borne  in  mind 
that  such  a  provision  would  be  availed  of  slowly  by  the  national 
banks.  There  are  now  about  $300,000,000  of  circulation  out. 
Sujipose  this  proposed  measiire  should  be  availed  of  to  the  extent 
of  the  whole  two  hundred  millions,  which  it  would  not  be  within 
six  -months  or  a  year,  you  would  have  withdrawn  and  put  on 
deposit  in  the  Treasury  only  sixty  millions  of  legal-tender  notes. 

You  change  the  place,  btit  you  still  keep  the  pain.  The  with- 
drawal of  sixty  or  one  hundred  millions  of  dollars  of  the  five  hun- 
dred millions  of  legal-tender  demand  notes  outstanding  will  not 
take  away  the  means  for  making  demands  on  the  Treasury. 
Where  is  the  relief  to  come  in  during  the  time  in  which  relief  is 
absolutely  necessary?  I  wish  I  could  see  some  relief  in  such  a 
measure,  if  it  be  passed,  but  I  can  not. 

Again,  you  are  to  bear  in  mind  tnat  under  this  bill,  when 
the  banks  take  out  currency,  that  currency  is  redeemable  in  law- 
ful money;  and  the  banks  will  naturally  use  the  legal-tenders  in 
redeeming  their  notes,  and  in  order  to  obtain  the  gold  they  will 
go  to  the  Treasury  with  these  notes.  You  do  not  really  relieve 
the  Treasury,  therefore,  by  such  an  exchange  as  this. 

It  seems  to  me,  Mr.  Chairman — and  I  have  endeavored  to  look  at 
the  matter  carefully  and  from  the  most  favorable  point  of  view— it 
seems  to  me  that  there  is  nothing  in  the  bill  that  meets  the  pres- 
ent situation  of  the  Treasury  in  any  degree.  Whether  it  passes 
or  not,  unless  you  take  measures  at  this  session  to  increase  the 
reveniies  of  the  Government,  within  two  months  there  will  be 
another  issue  of  fifty  millions  of  5  per  cent  interest-bearing  bonds 
(unless  you  do  the  sensible  thing  and  authorize  a  2|  per  cent  or  3 
per  cent  bond  to  be  issued)  and  before  the  end  of  the  fiscal  year 
another  fifty  millions  must  be  issued.  There  is  no  end  to  this  sort 
of  business  wath  the  distrust  that  prevails.  Unless  you  can  restore 
confidence  in  some  way  this  thing  must  go  on. 
1732 3 


10 

Now.  how  is  confidence  to  be  restored?  What  is  the  essential 
thing  for  yon  to  do  in  order  to  restore  it?  The  first  thing,  as  I 
have  already  said,  is  to  make  your  revenues  equal  to  your  expendi- 
tures. The  next  is  to  give  the  Secretary  of  the  Treasury  abundant 
authority  to  issue  a  low-interest  bearing  bond  to  maintain  the  re- 
demption fund  at  the  minimum  of  one  hundred  millions.  When 
I  say  that,  I  mean  the  most  vital  thing  to  be  done  in  reference  to 
our  redemption  fund  is  not  to  allow  it  to  drop  a  single  dollar  be- 
low the  minimum  of  one  hundred  millions.  It  ought  to  be  main- 
tained at  a  higher  figure,  vrith  the  Treasury  notes  pressing  on  it. 
With  the  redemption  fund  running  down  from  one  hundred  mil- 
lions to  ninety,  from  ninety  to  eighty,  from  eighty  to  seventy, 
from  seventy  to  sixtj-,  and  then  to  fifty -two  millions,  it  is  impos- 
sible to  prevent  distrust  from  creeping  not  only  over  our  own  peo- 
ple, but  over  those  people  who  deal  with  us  abroad. 

I  believe  that  if  the  Secretary  of  the  Treasury,  even  under  the 
situation  as  it  then  existed,  as  early  as  March,  1893,  had  issued 
fiftj^  millions  of  bonds  and  placed  fifty  millions  more  of  gold  in 
the  redemption  fund,  and  announced  to  the  world  that  that  re- 
demption fund  under  any  and  all  circumstances  would  not  be  al- 
lowe'd  to  drop  below  $100,000,000,  confidence  wotild  have  been 
maintained  and  we  should  not  have  had  the  presentation  of  legal 
tenders  for  redemption  to  the  serious  extent  they  have  been. 
Certainly  that  would  have  been  the  case  if  early  steps  had  been 
taken  to  increase  the  revenue. 

I  think  it  was  a  fatal  mistake  in  1893.  and  it  is  a  fatal  mistake 
to-day,  to  allow  the  gold  redemption  fund  to  decline  below  one 
hundred  millions.  You  can  not  restore  confidence  unless  this 
minimum  amount  of  gold  for  redemption  of  the  outstanding  legal 
tenders  shall  be  permanently  maintained.  In  the  public  mind  it  is 
the  line  between  confidence  and  distrust.  When  it  is  suffered  to 
go  below,  distrust  begins  to  creep  upon  the  country. 

Now  I  did  not  intend  to  delay  the  committee  so  long  on  this 
branch  of  the  subject,  yet  it  is,  in  my  mind,  the  most  important 
part  of  the  legislation  required.  Whatever  is  done  with  reference 
to  relieving  the  necessities  of  the  Treasury  should  be  done 
promptly.  I  wash  I  could  see  presented  here  some  simple  legisla- 
tion in  such  directions  as  are  absolutely  essential  to  the  restoring 
of  the  confidence  which  has  been  lost. 

THE  SILVER  CERTIFICATES. 

One  thing  in  this  bill,  Mr.  Chairman,  I  regard  as  of  exceeding 
value,  and  hope  it  will  be  enacted  into  law  as  a  separate  measure 
before  the  session  terminates;  and  that  is  the  provision  that  there 
be  "withdrawn  all  denominations  of  paper  money  outside  of  silver 
certificates  in  excess  of  $5,  and  that  silver  certificates  shall  be  given 
the  exclusive  field  of  circulation  for  one.  two,  and  five  dollar  denom- 
inations. It  is  exceedingly  wise  for  this  reason:  Nearly  ail  of  the 
silver  certificates  that  are  now  outstanding,  about  $337,000,000  in. 
all,  would  be  required  to  fill  the  field  of  circulation  for  one,  two, 
three,  and  five  dollar  notes.  At  present  the  silver  certificates  are 
largely  of  larger  denominations  than  that,  and  are  being  used  to 

?ay  customs  duties,  and  thus  prevent  gold  from  getting  into  the 
reasury. 

Why,  on  some  days  in  the  last  year  84  per  cent  of  the  duties 
1733 


11 

were  paid  in  silver  certificates.  If  this  provision  could  be  enacted 
into  law,  and  all  the  denominations  of  silver  certificates  above  $5 
withdrawn  from  circulation,  then  nearly  all  of  the  three  hundred 
and  thirty-seven  millions  of  such  certificates  would  be  kept  in 
circulation  for  daily  use  amongst  the  people  and  would  not  ac- 
cumiilate  in  the  money  centers  to  be  used  for  the  payment  of  gold 
duties.  Then  we  should  receive  gold  into  the  Treasury  for  customs 
duties  instead  of  silver  certificates.  I  regard  that  as  the  most 
valuable  provision  there  is  in  this  bill,  and  I  hope,  as  I  have  said, 
it  v^ll  be  taken  from  it  and  put  in  a  position  where  it  can  pass 
before  the  end  of  the  session. 

GOVERNMENT  NOTES  AS   CURRENCY. 

Mr.  Chairman,  while  criticising  the  pending  bill  for  its  f^tal 
departure  from  the  fundamental  national  idea,  I  wish  at  the  same 
time  to  commend  its  recognition  of  a  sound  principle  of  finance: 
That  in  time  of  peace  whatever  credit  currency  is  reqiiired  by 
modern  business  outside  of  coin— and  I  may  add  that  modern 
business  can  not  be  successfiilly  and  economically  carried  on  with 
coin  and  coin  certificates  alone — should  be  issued  not  by  the 
Government  itself  on  its  ,  own  credit,  but  b.y  banking  institu- 
tions authorized  to  issue  their  own  notes  under  such  Government 
restrictions  and  regulations,  and  with  such  Government  super- 
vision as  will  secure  their  final  payment,  permanent  convertibility, 
and  constant  adaptation  to  the  wants  of  business. 

It  is  of  inestimable  value  to  the  business  of  this  country  to  have 
this  important  financial  truth,  established  by  the  experience  of 
commercial  nations,  at  last  admitted  even  by  those  who  have  in 
the  past  maintained  otherwise,  notwithstanding  it  has  required 
the  costly  lessons  of  our  own  experience  in  the  past  year,  with  a 
limited  volume  of  Government  legal-tender  demand  notes,  to  work 
conviction. 

It  is  probable  that  on  the  1st  of  July  next  there  will  be  outstand- 
ing at  least  three  hundred  millions  of  United  States  bonds,  includ- 
ing the  ninety-five  and  a  half  millions  originally  sold  to  establish 
the  fund,  which  have  been  sold  to  provide  the  coin  reqiiired  to  re- 
deem a  part  of  the  United  States  legal-tender  notes  issued  as  cur- 
rency, while  every  dollar  redeemed  has  been  reissued  and  is  liable 
to  be  presented  again  and  again  for  redemption. 

If  this  state  of  things  shoiild  continue  through  the  next  fiscal 
year  it  is  easy  to  see  that  the  annual  interest  on  "the  bonds  sold  to 
maintain  the  redemption  fund  in  these  two  years— not  to  mention 
the  probable  necessity  of  many  other  issues  of  bonds  in  the  future — 
would  be  far  more  than  the  annual  interest  on  the  bonds  required 
to  fund  every  dollar  of  the  outstanding  notes;  and  the  cost  to  the 
Treasury  of  maintaining  our  issues  of  Government  demand  notes 
the  past  eighteen  months  is  infinitesimal  compared  with  the  inju- 
ries sustained  by  the  business  of  the  country  through  this  unsat- 
isfactory condition. 

Mr.  Chairman,  several  times  in  the  course  of  this  debate  the 
inquiry  has  been  made,  "  Why  not  stop  this  draft  on  the  Treasury 
gold  reserve  by  availing  ourselves  of  our  technical  legal  right  to 
pay  owv  legal-tender  demand  notes  in  silver?"  It  is  sufficient  to 
say  in  reply  that  when  the  Government  adopts  the  policy  of  forc- 
ing its  creditors  to  accept  silver  in  payment  for  obligations  here- 
1733 


12 

tofore  held  to  be  gold  obligations,  against  their  consent,  it  ■will 
be  regarded  by  the  biisiness  world  as  a  confession  that  hereafter 
silver  is  not  to  be  maintained  at  parity  wdth  gold  in  our  currency, 
and  gold  will  go  to  a  premium  and  this  coiintry  will  go  to  a  de- 
preciated silver  basis.  From  the  hour  when  this  i)olicy  shoiild  be 
adopted  this  country  would  witness  the  beginning  of  a  panic  such 
as  never  before  been  known  in  this  country.  A  bank  may  tem- 
porize by  inquiring  into  the  necessities  of  the  holder  of  its  notes, 
as  the  Bank  of  France  does,  although  it  is  doubtful  if  a  bank  in 
any  country  but  France,  with  her  great  holding  of  nine  hiindred 
millions  of  gold  and  only  ninety  millions  of  uncovered  paper, 
could  do  this  ^-ithout  injuring  its  credit;  but  a  government  can 
not  do  this  without  impairing  confidence. 

There  is  but  one  course  open  to  us  if  we  issue  Government  de- 
mand notes  as  legal-tender  currency,  even  in  a  limited  and  fixed 
volume,  and  that  is  to  maintain  a  sufficient  gold  reserve — never 
less  than  30  per  cent  of  even  a  limited  issue — to  redeem  such  notes, 
at  whatever  cost,  whenever  presented  for  payment,  taking  all  the 
risks  which  en\dron  the  issue  of  Government  legal-tender  demand 
notes,  risks  which  increase  in  geometrical  progression  as  the  issue 
enlarges,  and  keeping  constantly  in  mind  the  fact  that  beyond  a 
limited  and  fixed  volume,  which  leaves  abundant  place  for  a  com- 
mercial currency  they  can  not  subserve  the  wants  of  trade. 

From  the  nature  of  the  case  a  Government  currency  can  not  be 
responsive  to  business  demands.  It  can  be  issued  by  Government 
only,  as  Government  expenditures  are  to  be  made  and  Government 
debts  are  to  be  paid  without  regard  to  the  pulses  of  b^^siness.  In- 
deed, the  Government  pulse  can  never  be  in  accord  with  the  pulses 
of  business.  When  the  country  is  prosperous  and  needs  the  most 
currency  the  revenue  is  larger  than  the  expenditures,  and  the 
Government  has  no  occasion  to  issue  its  notes.  When  the  busi- 
ness of  the  country  is  depressed  and  less  currency  is  required,  the 
national  revenue  falls  below  exjjenditures  and  the  Government 
proceeds  to  issue  more  notes  when  they  are  not  needed. 

The  characteristics  of  Government  notes  unfit  them  for  ex- 
changes, while  those  of  bank  notes  peculiarly  adapt  them  to  busi- 
ness requirements.  A  Government  note  always  represents  dead 
propert}' — property  already  consumed,  and  therefore  having  noth- 
ing behind  it  but  the  Government  promise.  A  bank  note,  on  the 
other  hand,  generally  represents  live  property — property  in  the 
course  of  adaptation  to  the  wants  of  man  or  in  the  process  of  dis- 
tribution— which,  when  it  reaches  the  consumer,  is  exchanged  for 
an  equivalent  available  to  the  bank  for  redemjjtion  purposes. 
Indeed,  the  business  of  banking  is  simply  the  exchange  of  its 
well-known  and  generally  acceptable  demand  credit  foflocal  time 
credits  unavailable  in  trade. 

This  indicates  the  striking  difference  between  the  reserve  re- 
quired to  maintain  bank  demand  notes  at  par  and  that  required 
to  maintain  Government  demand  notes  at  par.  Every  note  of  a 
bank  is  issued  for  a  quick  asset,  available  usually  in  thirty,  sixty, 
or  ninety  days,  and  the  legal-tender  reserve  required  in  addition 
is,  therefore,  not  only  limited  but  continuously  renewed.  Every 
note  issued  by  a  government  is  issued  for  property  which  it  has 
already  consumed,  and  is  simply  evidence  of  government  indebt- 
edness, for  whose  redemption  in  coin  the  government  must  rely 
1733 


13 

exclusively  on  taxation  or  borrowing.  From  the  necessity  of  the 
case  a  bank  can  maintain  its  notes  at  par  with  less  reserve  and  less 
expense  than  a  government  can.  A  government  can  not  protect 
its  reserve  in  any  other  way  than  by  reusing  payment,  which  is 
fatal.  Banks  can  protect  their  reserves,  as  the  Bank  of  England 
does,  by  raising  the  rate  of  interest  or  by  other  devices. 

Moreover,  as  Congress  is  political  and  dependent  on  votes,  all  ex- 
perience shows  that  the  issues  of  Government  notes  generally  mul- 
tiply, because  it  is  more  popular  to  issue  demand  notes  than  to  im- 
pose taxes,  in  consequence  of  which  eventually  they  depreciate. 
The  financial  history  of  the  world  is  filled  with  warnings  of  the 
danger  incurred  in  issues  of  Government  notes  to  be  used  as  cur- 
rency. 

I  have  no  doubt  that  our  present  fixed  volume  of  greenbacks 
($346,000,000)  can  be  retained  with  a  minimum  redemption  fund 
of  $100,000,000  without  inviting  a  run  on  that  reserve,  provided 
our  revenue  shall  be  kept  constantly  equal  to  and  a  little  more 
than  our  expenditures,  and  provided  it  shall  be  distinctly  under- 
stood that  no  additions  are  to  be  made  to  it,  leaving  to  national 
banking  institutions  to  issue  whatever  additional  credit  currency 
may  be  desired  by  business  in  the  futiire,  under  such  modifica- 
tions of  the  system  as  will  make  it  elastic  in  issixe,  that  is,  respon- 
sive to  business  demands. 

THE  VOLUME  OF  CURRENCY  OBJECTION. 

Mr.  Chairman,  I  am  aware  that  gentlemen  who  entertain  the 
views  of  money  held  by  what  was  popularly  known  as  the  Green- 
back party  are  accustomed  to  brush  aside  these  objections  against 
the  issue  of  Government  legal-tender  notes  in  time  of  peace  to 
hold  exclusively  the  field  of  a  credit  currency,  by  declaiming 
against  the  alleged  danger  and  even  wickedness  of  the  Govern- 
ment surrendering  to  banks  the  power  of  determining  the  volume 
of  money,  which  they  affirm  is  what  is  granted  to  banks  by  any 
laws  which  allow  the  issue  of  their  notes  for  use  as  currency. 
Gentlemen  have  pressed  this  objection  during  this  debate  with 
great  ingenuity  and  eloquence,  contending  that  for  this  reason,  if 
no  other,  the  Government  itself  should  directly  issue  all  credit 
notes  Congress  may  from  time  to  time  determine,  as  well  as  other 
forms  of  money,  that  go  to  make  up  the  volume  of  currency 
required  by  business. 

Now,  if  gentlemen  will  reflect,  they  will  reach  the  conclusion 
that  in  every  well-ordered  and  successful  financial  system  the  vol- 
iime  of  currency  required  at  any  time  is  not,  and  never  can  be, 
wisely  determined  beforehand  by  any  body  of  men,  however  wise 
and  skilled  in  business  affairs— least  of  all  by  a  party  majority  in 
Congress,  outside  of  the  pulses  of  business,  and  too  many  of  that 
majority  thinking  more  of  votes  at  the  next  election  than  of  the 
laws  of  trade.  It  can  be  determined  only  by  the  demands  of  bus- 
iness. 

Suppose  I  should  present  as  an  argument  against  the  free  coin- 
age of  silver,  or  of  gold,  that  this  would  leave  the  owners  of  silver 
or  gold  mines  to  determine  what  should  be  the  volume  of  standard 
silver  dollars  and  of  gold  coined,  and  that  for  this  reason  the  Gov- 
ernment should  buy  and  coin  on  its  own  account  and  thus  control 
the  volume.  Would  not  these  gentlemen  conclusively  reply  that 
with  free  coinage,  when  business  requires  more  silver  or  gold 
1733 


14 

coins,  and  is  ready  to  buy  or  loan  them,  it  would  be  for  the  in- 
terest of  the  owners  of  silver  bullion  to  take  their  silver  to  the 
mints  and  have  the  Government  exercise  its  proper  function  of 
coining,  that  is,  certifying  that  each  coin  minted  by  it  has  tlie 
weight  and  fineness  required  to  give  it  the  coinage  value  indi- 
cated by  the  stamp? 

For  the  same  reason  that  it  is  not  the  function  of  Government 
to  buy  and  coin  gold  and  silver  bullion  on  its  own  account,  and  to 
determine  the  volume  of  ftill  legal-tender  gold  or  silver  that  shall 
be  coined  and  outstanding— and  never  can  be  where  bullion  is 
coined  at  its  market  value — but  its  function  is  simply  to  coin  bul- 
lion belonging  to  others,  i.  e.,  see  that  each  piece  of  such  bullion 
which  it  stamps  as  coin  has  the  requisite  weight  and  fineness,  leav- 
ing business  demands  to  regulate  the  volume;  it  is  also  not  the 
function  of  Government  to  issue  its  own  credit  notes  as  credit  cui*- 
rency  or  to  determine  the  volume  that  shall  be  issued,  but  simply 
to  authorize  associations  of  any  citizens  organized  for  that  pur- 
pose under  general  laws,  with  restrictions  and  regulations  that 
will  secure  the  safety,  constant  convertibility,  and  elasticity  of 
their  issiies,  to  issue  their  circulating  notes  as  credit  currency 
without  legal-tender  power,  on  blanks  furnished  by  the  Govern- 
ment, under  such  constant  control  and  supervision  of  the  national 
authorities  as  will  secure  their  payment  and  convertibility,  leav- 
ing business  demands  to  determine  the  volume  from  time  to  time. 

For  under  a  banking  system  so  organized  as  to  secure  a  slight 
profit  from  the  issue  of  circulating  notes  whenever  business  de- 
sires them  the  same  self-interest  that  would  lead  the  holder  of 
biallion  to  take  it  to  the  mint  and  have  it  coined  will  also  lead  a 
banking  institution  to  issue  its  notes  when  they  are  wanted,  while 
the  self-interest  of  holders  of  bank  notes  will  lead  them  to  return 
such  notes  for  payment  when  they  are  not  wanted. 

Gentlemen  have  condemned  laws  authorizing  the  issue  of  notes 
by  national  banking  associations  as  the  gi'anting  of  favors  to 
bankers  which  are  denied  to  other  men.  As  well  might  they  have 
stigmatized  the  granting  of  charters  to  companies  to  erect  mills 
as  legislative  favors  to  manufacturers.  Any  five  men,  whether 
laborers  or  farmers  or  mechanics,  may  organize  a  banking  asso- 
ciation to  issue  circulating  notes  under  the  conditions  provided 
by  law,  just  as  they  may  be  organized  into  a  company  to  build  a 
mill  or  to  carry  on  a  newspaper  or  do  other  business.  To  be 
sure,  they  can  not  commence  the  banking  business  without  the 
requisite  capital  or  credit  any  more  than  they  can  build  a  mill  or 
buy  and  successfiilly  run  a  newspaper  or  do  any  other  business 
without  means  or  credit  to  use  in  such  business.  The  business  of 
banking  under  the  national  banking  law  is  open  to  the  fullest 
com])etition.  and  has  not  in  it  a  single  element  of  monopoly  or 
favoritism.    National  banks  are  the  freest  institutions  in  the  land. 

STATE  BANKS  AS  BANKS  OF  ISSUE. 

I  now  come,  Mr.  Chairman,  to  the  overshadowing  objection  to 
this  bill,  and  this  is  that  it  revives  State  banks  as  banks  of  issue. 
It  is  to  me  a  matter  of  surjirise  that  after  this  House,  only  six 
months  ago,  declared  by  70  majority  against  the  rehabilitation  of 
State  banks  as  banks  of  issue,  the  Secretary  of  the  Treasury  should 
formulate  and  the  majority  of  the  Committee  on  Banking  and 
1733 


10 

Currency  should  report  a  banking  bill  whose  central  feature  pro- 
vides for  exactly  that  which  the  House  so  recently  and  so  em- 
phatically declared  it  would  not  tolerate. 

And  the  excuse  given  by  the  chairman  of  the  Banking  Com- 
mittee [Mr.  Springer]  for  this  right-aboiit-face,  viz,  that  this 
bill  provides  for  the  rehabilitation  of  State  banks  as  banks  of 
issue  only  on  conditions  which  he  thinks  are  entirely  satisfactory, 
only  serves  to  increase  my  surprise.  For  if  there  was  one  argu- 
ment against  State  banks  of  issue  made  by  him  and  by  others 
more  prominent  than  any  other  in  the  discussion  of  this  question 
at  the  last  session,  it  was  that  after  our  experience  of  the  great 
advantages  of  one  uniform  national  banking  system,  under  na- 
tional control  and  national  supervision,  over  twoscore  different 
State  systems,  under  the  divided  and  discordant  control  and  super- 
vision of  as  many  different  States,  the  country  never  would  con- 
sent to  go  back. 

If  the  conditions  under  which  the  pending  bill  proposes  to  re- 
habilitate State  banks  as  banks  of  issue  make  them  practically  na- 
tional so  far  as  note  issues  are  concerned,  as  the  gentleman  from 
Illinois  [Mr.  Springer]  worild  have  us  infer,  then  certainly  it 
would  be  not  only  a  waste  of  time,  but  unwise  from  any  point 
of  view,  to  attempt  to  maintain  State  banks  of  issue  in  name  when 
in  reality  the  limitations,  restrictions,  control,  and  supervision  of 
their  chief  function  are  to  be  national.  If  this  were  to  be  the 
case  in  fact  I  am  sure  that  every  stipporter  of  the  State-bank  sys- 
terd  would  say,  "  Better  avoid  confusion,  ^^ncertainty,  and  conflict 
of  jurisdiction  by  not  undertaking  to  establish  a  double-headed 
system  with  a  State  annex  in  form,  when  it  must  be  national  in 
reality." 

But,  Mr.  Chairman,  it  is  because  the  conditions  proposed  are 
only  shadow  and  not  substance  that  gentlemen  who  cling  to  State 
banks  of  issue  as  if  they  recognized  something  of  State  rights 
ideas  accept  them  as  a  realization  of  their  dreams  of  State  sov- 
ereignty. Do  these  conditions  contemplate,  as  to  issue  functions, 
national  control  and  national  supervision?  Nothing  of  the  kind; 
but,  on  the  contrary,  the  control  and  supervision  of  forty-five 
States.  If  it  be  said  that  in  four  respects,  viz,  the  maximum  limit 
of  issue,  the  deposit  of  a  guaranty  fund,  personal  liability  of 
shareholders,  and  first  lien  on  assets,  it  is  proposed  to  require  that 
State  banks  of  issue  shall  conform  to  the  status  of  national  banks 
as  a  condition  of  exemption  from  the  10  per  cent  tax,  I  reply  that, 
in  the  first  place,  these  are  only  a  part  of  the  requirements  for  na- 
tional banks,  and  that,  even  if  they  were  all,  the  failure  to  pro- 
vide for  effective  national  supervision  would  make  the  requirements 
practically  nugatory. 

Practically  it  would  be  found  impossible  to  exercise  any  effect- 
ive national  control  over  State  banks  of  issue  under  such  legisla- 
tion as  is  proposed,  as  State  banks  receive  their  franchises  from 
the  several  States  and  are  subject  to  State  control  and  supervi- 
sion; and  even  the  right  of  the  national  Comptroller  of  the  Cur- 
rency to  investigate  from  time  to  time  the  condition  of  a  State 
bank  to  ascertain  whether  the  four  national  conditions  of  issue 
have  been  complied  with  is  left  purposely  to  an  uncertain  implica- 
tion, rather  than  positive  provision,  of  law.  Certainly,  gentle- 
men who  take  the  ground,  as  many  friends  of  State  banks  do,  that 
1733 


the  National  Government  has  no  right  to  interfere  with  State 
banks  of  issue,  ^vill  not  be  likely  to  hereafter  provide  any  serious 
Federal  restrictions  on  the  issues  of  such  banks. 

I  call  attention  to  the  fact  that  even  the  editor  of  the  New  York 
Journal  of  Counnerce,  who  has  been  improperlj-  quoted  during  this 
debate  as  an  advocate  of  this  bill,  expressly  repudiated  the  idea 
of  such  a  double-headed  State  and  national  bank-note  issue,  and, 
on  being  cross-questioned,  declared  that  the  issue  function  of  State 
banks  should  be  placed  exclusively  under  national  laws  and  na- 
tional supervision,  leaving  the  deposit  and  discount  functions  of 
State  banks  under  State  authority.  Mr.  Dodsworth  clearly  saw — 
what  the  advocates  of  this  bill  seem  to  have  onaitted  to  practically 
take  note  of — that  it  would  be  a  fatal  mistake  to  surrender  the 
issue  function  of  State  banks  in  any  manner  to  State  authority, 
and  imjiracticable  to  place  this  function  under  the  divided  author- 
ity of  both  State  and  nation. 

Mr.  Chairman,  the  fact  must  not  be  overlooked  that  the  condi- 
tions proposed  practically  offer  a  premium  for  even  existing  na- 
tional banks  to  change  to  State  banks  of  issue,  by  exempting  State 
banks  of  issue,  not  only  from  the  essential  but  exacting  Govern- 
ment supervision,  but  also  from  the  payment  of  the  general  tax  of 
half  of  1  per  cent  per  annum,  and  also  the  payment  of  the  special 
safety-fund  tax  of  the  same  ahiount.  When  it  is  borne  in  mind 
that  banking  is  a  business,  pursued  because  of  the  expectation  of 
profit  like  other  kinds  of  business,  it  will  be  seen  that  if  this  bill 
should  become  a  law  there  would  be  serious  danger  that  under  the 
guise  of  extending  the  national  banking  system  it  would  prove  to 
be  a  potent  inducement  for  its  destruction  and  for  the  substitution 
of  forty-five  State  bank  systems. 

Mr.  Chairman,  I  do  not  propose  at  this  time  to  recall  at  length 
the  arguments  for  one  national  rather  than  forty-five  State-bank 
systems  which  led  this  House  at  the  last  session  by  70  majority  to 
declare  against  the  rehabilitation  of  State  banks  as  banks  of  issue 
in  any  form.  I  merely  indicate  some  of  the  points  of  these  argu- 
ments. 

The  four  essentials  of  a  good  bank  ciin-ency  are,  first,  ultimate 
safety  or  pajTnent  of  issues;  second,  immediate  convertibility  into 
coin  or  its  equivalent:  third,  uniformity,  convenience,  and  econ- 
omy; and  fourth,  elasticity  of  issue — that  is,  response  of  issue  to 
the  demands  of  business. 

The  iirst  three  of  there  essentials  have  been  found  in  the  circu- 
lation of  our  national  banks  as  they  never  have  been  and  never 
can  be  found  in  the  circulating  notes  of  forty-five  different  State- 
bank  systems. 

As  to  ultimate  safety,  contrast  the  fact  that  in  thirty  years'  ex- 
perience with  State  systems  before  the  war,  according  to  the 
Comptroller  of  the  Currency,  the  losses  throiigh  the  notes  of  the 
failed  banks  averaged  one-fifth  of  the  aggregate  circulation;  while 
not  one  dollar  has  been  lost  by  holders  of  notes  of  national  banks 
in  the  thirty  years  since  the  national  banking  system  became  gen- 
eral. 

As  to  convertibility,  contrast  the  fact  that  the  notes  of  State 
banks  were  constantly  from  one-half  of  1  per  cent  to  5  per  cent  dis- 
count, where  they  were  received  at  all,  otitside  of  the  States  of  issue, 
with  the  fact  that  during  the  thirty  years  in  which  we  have  had 
1733 


17 

the  national  system  the  notes  of  national  banks  in  Texas  or  Oregon 
have  been  as  current  at  par  in  Maine  or  New  York  as  in  the  States 
where  issued. 

As  to  uniformity,  convenience,  and  economy,  contrast  the  fact 
that  in  the  years  of  our  different  State  systems  before  the  war  the 
diversity  of  circiilating  notes  made  counterfeiting  easy,  promoted 
distrtist,  and  limited  the  usefulness  of  notes  of  issue,  and  the  ab- 
sence of  a  common  control  and  common  regulations  and  a  com- 
mon tie  increased  the  friction  and  cost  of  exchanges;  while  in  the 
thirty  years  since  the  war.  under  the  national  system,  counterfeit- 
ing has  been  made  difficult  and  the  detection  of  counterfeiters 
easy — it  has  been  unnecessary  for  the  traveler  or  business  man 
to  consider  for  a  moment  whether  the  national  notes  which  he 
carried  were  issued  in  Vermont  or  Montana  or  Mississippi,  and 
has  so  promoted  and  economized  exchanges  that  the  Comptroller 
of  the  Currency  estimates  a  saving  of  at  least  one  hundred  and 
twenty  millions  per  annum  on  bil  >s  of  exchange  alone  in  the  con- 
duct of  the  business  of  the  country. 

In  directions  affecting  elasticity  of  issue  alone  the  national  sys- 
tem needs  amendment  to  adapt  it  to  changed  conditions.  When 
established  it  was  reasonably  elastic  as  to  issue,  because  United 
States  bonds  were  abundant  and  obtainable  at  or  below  par,  so 
that  a  profit  could  be  made  on  note  issues  which  could  be  loaned. 
But  in  progress  of  time  such  bonds  have  become  scarce  and  com- 
mand a  premium,  and  this,  coupled  with  the  fact  that  the  law 
still  permits  an  issue  of  only  90  per  cent  of  the  par  value  of  the 
bonds,  has  made  the  issue  of  circulating  notes  on  such  bond  secu- 
rity unprofitable,  and  in  making  it  unprofitable  has  made  it  unre- 
sponsive to  business  demands. 

If,  instead  of  devising  a  bill  to  rehabilitate  State  banks  of  issue, 
the  Committee  on  Banking  and  Currency  had  assumed,  what 
they  should  have  assumed,  that  any  legislation  dealing  with  banks 
of  issue  must  be  on  the  lines  of  a  uniform  national  system,  under 
the  sole  control  and  constant  supervision  of  the  nation,  and  had 
proceeded  to  make  such  changes  in  the  national  system  as  would 
have  provided  reasonable  sectirity  on  the  one  hand  and  reasonable 
elasticity  of  issue  on  the  other  hand,  they  would  have  done  them- 
selves more  credit  and  the  country  a  real  service,  even  if  their 
work  had  not  resulted  in  legislation  at  this  session. 

But  in  bringing  into  the  House  a  hastily  framed  bill,  which 
has  not  even  had  the  benefit  of  the  criticisms  and  amendments  of 
the  members  of  that  committee  in  the  committee  room,  whose 
central  idea  is  the  rehabilitation  of  State  banks  as  banks  of  issue, 
they  have  failed  to  strike  the  keynote  of  the  legislation  which  the 
country  expects. 

I  can  not  understand,  Mr.  Chairman,  why  it  is  that  so  many  of 
our  Southern  friends  look  so  favorably  upon  State  banks  of  issue. 
If  it  is  because  they  find  the  national  system  requires  so  excessive 
security  for  the  issue  of  circulating  notes  as  to  fail  to  adapt  itself 
to  their  wants,  then  I  ask.  Why  not  join  those  who  believe  in 
the  national  system  in  so  modifying  the  security  requirements  en- 
acted under  different  conditions  as  to  make  them  conform  to  the 
present  situation?  For  it  must  be  apparent  to  every  student  of 
finance  that  a  national  system  in  which  each  bank  must  receive 
at  par  the  notes  of  every  other  bank  in  payment  of  debts  due  to 
1733 — -3 


18 

it — which  would  be  impossible  with  the  notes  of  State  banks — re- 
quires less  security  to  make  circulating  notes  safe  and  convertible 
than  would  be  necessary  under  disunited  State  systems. 

It  ought  to  be  evident,  as  the  Comptroller  of  the  Currency  so 
clearly  shows  in  his  last  report,  that  for  this  reason,  as  well  as  for  the 
reason  that  there  is  greater  confidence  in  the  intelligence,  efficacy, 
and  courage  of  national  supervision  than  State  supervision  of  bank 
issues,  there  is  more  confidence,  not  only  among  the  people,  but 
also  among  capitalists,  in  national  banking  institutions  than  in 
State  banks.  Inasmuch  as  the  Southern  people  rightly  regard  it 
as  of  the  greatest  importance  to  them  that  Northern  capital  should 
be  attracted  to  their  States,  not  only  for  banking  purposes,  but 
also  for  industrial  development,  it  is  certainly  surprising  that  their 
Representatives  in  Congress  should  for  a  moment  fall  into  the  error 
of  regarding  State  banks  as  more  desirable  than  national  banking 
institutions  for  that  part  of  the  Union,  for  capital  would  be  much 
more  likely  attracted  to  a  national  than  to  a  State  bank. 

If  it  is  because  it  is  thought  that  State-bank  notes  vdll  stay  at 
home  and  not  tend,  at  certain  seasons  when  payments  are  to 
be  made  for  supplies  and  when  there  is  little  demand  for  home 
loans,  to  move  to  commercial  centers,  then  I  call  attention  to  the 
fact  that  there  can  be  no  difference  in  this  respect  between  a  good 
currency  issued  by  State  banks,  or  by  national  banks,  or  even  by 
the  nation  itself,  for  the  unwritten  laws  of  trade  are  supreme.  The 
only  way  that  I  know  of  to  keep  currency  at  home  when  there  is 
no  demand  for  it  for  home  business,  and  when  it  is  required  to 
make  pajnnents  at  the  commercial  centers,  is  to  make  it  so  poor 
that  nobody  outside  will  take  it  except  at  a  discount.  It  is  the 
addled  eggs,  not  the  good  eggs  that  stay  at  home.  If  there  be  any 
pro\Tsions  in  the  laws  regulating  our  national  system  which  im- 
properly act  as  an  inducement  for  country  banks  to  deposit  in 
reserve  cities  loanable  funds  needed  at  home,  as  sometimes  charged, 
such  provisions  may  be  easily  modified.  A  little  reflection  ought 
to  satisfy  everyone  that  any  currency  which  will  not  pass  beyond 
the  State  lines  where  issued,  except  at  a  discount,  entails  a  loss  on 
the  people  of  such  State  proportioned  to  the  discount  to  which  it 
is  subjected  when  purchases  are  to  be  made  outside  of  State  limits. 

I  have  heard  some  of  our  Soiithern  friends  say  that  they  wanted 
a  home  currency — a  currency  in  which  their  own  people  were  in- 
terested, but  I  can  not  understand  why  a  dozen  citizens  of  Georgia, 
for  example,  who  organize  a  State  bank,  are  any  more  interested 
in  their  people  than  when  they  organize  a  national  bank,  or  why 
the  issues  of  a  national  bank  in  Charleston  are  any  the  less  a  home 
currency  than  the  issues  of  a  State  bank  in  the  same  city. 

Mr.  Chairman,  the  regulation  of  the  currency  is  a  function  essen- 
tially national,  and  no  State  has  any  more  business  with  it  than 
with  the  regulation  of  postal  affairs  or  the  regulation  of  interstate 
and  foreign  commerce.  Whatever  possesses  the  circulating  quahty, 
that  is,  the  quality  which  causes  it  to  pass  on  delivery  from  hand 
to  hand  in  exchange  for  valuables — a  quality  entirely  distinct  from 
that  possessed  by  a  check  or  bill  of  exchange — is  money,  and  as 
such  shovQd  be  issued  under  national  laws  alone  and  subject  alone 
to  national  control  and  super\nsion.  And  in  saying  this,  I  only- 
repeat  what  the  people  of  this  country  have  settled  beyond  recall; 
and  whatever  party  or  whatever  men  or  set  of  men  undertake  to 
1733 


19 

settle  our  currency  problem  may  as  well  understand  first  as  last 
that  it  must  be  settled  on  national  and  not  on  State  lines, 

StTGGESTIONS  OF  TENTATIVE  LEGISLATION. 

Mr.  Chairman,  I  do  not  propose  at  this  time  to  enter  further  into 
this  discussion.  I  wish  simply  to  say  that  I  regret  exceedingly  that 
this  bill  could  not  have  had  that  careful  consideration  by  the  whole 
committee  for  the  purposes  of  inquiry  and  investigation  and  amend- 
ment that  so  important  a  measure  demands.  Why,  the  changes 
that  have  been  already  made  in  this  bill  indicate  that  it  has  not  had 
the  carefiil  consideration  in  committee  which  it  should  have  had. 
If  I  understand  correctly,  this  bill  was  never  considered  by  the  full 
committee  for  the  purposes  of  amendment. 

Mr.  WALKER.    It  was  never  read. 

Mr.  DINGLEY.  My  friend  from  Massachusetts  says  it  was 
never  read. 

Mr.  WALKER.    They  refused  to  read  it. 

Mr,  DINGLEY.  Mr.  Chairman,  you  could  not  imagine  a  bill 
of  greater  importance  in  its  details  than  this,  and  the  statement 
of  the  gentleman  from  Massachusetts  amazes  me. 

But,  as  I  have  said,  I  do  not  intend  at  this  time  to  take  the  bill 
up  in  detail.  The  details  are  to  come  before  us  when  the  bill  is 
under  consideration  for  amendment,  and  I  shall  have  something 
to  say  during  the  five-mintite  debate  upon  some  of  the  provisions 
of  the  bill  to  which  I  have  not  as  yet  alluded.  I  have  simply 
discussed  some  of  the  general  principles  involved.  Before  I  close 
I  wish  to  repeat  that  it  seems  to  me  that  a  measure  of  this  magni- 
tude, involving  purely  business  questions,  ought  to  be  considered 
in  a  business  spirit. 

I  can  imagine  that  we  may  not  have  sufficient  time  this  session 
to  perfect  the  details  of  such  a  measure  as  this,  but  if  we  are  not 
to  have  legislation  on  a  broad  scale  requiring  careful  examination 
and  investigation,  some  legislation  ought  to  be  had,  and  I  have 
suggested  some  of  the  directions  in  which  it  should  be  had.  For 
the  present,  until  there  can  be  sufficient  time  to  examine  the  whole 
subject  and  to  frame  a  bill  that  shall  meet  future  exigencies,  a  bill 
simply  increasing  the  amount  of  notes  that  may  be  issued  by 
national  banks  to  the  par  of  the  bonds,  and  providing  that  the  tax 
shall  be  reduced  one-half,  as  provided  in  this  bill,  would  meet  the 
exigency  as  to  banking  legislation. 

If  that  should  be  done  it  would  give  time  for  a  commission  to 
be  appointed  to  consist  of  members  elect  of  the  Fif  ty-f  oiirth  Con- 
gress, a  joint  committee  of  the  Senate  and  Hoiise,  to  consider  this 
whole  subject  and  report  further.  But  we  ought  not  to  be  deluded 
with  the  idea  that  in  hastily  passing  a  measiTre  of  this  kind  we 
are  relieving  the  Treasury  in  its  present  necessities,  and  we  should 
direct  our  attention  to  legislation  that  will  accomplish  that  pur- 
pose and  then  should  take  all  the  time  that  may  be  required  to  de- 
vise such  a  banking  system  as  will  be  adapted  to  the  future  business 
needs  of  the  country. 

GOLD  EXPORTS. 

Mr.  LIVINGSTON.  What  would  the  gentleman  suggest  as  a 
means  of  stopping  the  outflow  of  gold  from  the  Treasury  for  the 
time  being? 

Mr.  DINGLEY.    Does  the  gentleman   imagine  that  there  is 
anything  in  this  bill  that  would  stop  it? 
1733 


20 

Mr.  LIVINGSTON.  I  asked  the  sfentleman  what  suggestion 
he  would  make  to  meet  the  present  exigency  in  that  respect. 

Mr.  DINOLEY.  If  I  may  be  allowed  to  express  a  personal 
judgment  on  that  matter,  it  is  this:  We  are  having  an  outflow 
of  gold  now  under  very  peculiar  circumstances.  The  circum- 
stances are  these:  The  balance  of  trade  is  in  oiir  favor,  and  under 
that  condition  gold  ought  to  \w  coming  into  this  country.  The 
past  two  fiscal  years  we  exported  two  hundred  and  eighty-three 
millions  more  of  merchandise  than  Ave  imported — the  last  j'ear,  two 
hundred  and  sixty -four  millions  more;  and  yet  in  1S!)8  our  net  ex- 
ports of  gold  were  eighty-seven  and  one-half  millions,  and  the 
past  fiscal  year  four  millions.  The  exports  since  July  have  been 
renewed. 

Mr.  LIVINGSTON.     Gold  is  going  out. 

Mr.  DINGLEY.  Gold  is  going  out.  Now,  there  is  some  cause 
for  that.  I  think  there  are  two  causes.  I  think,  first,  that  in  view 
of  the  amount  of  business  that  is  being  done  to-day,  we  have  a  re- 
dundant currency.  We  are  having  a  large  volume  of  currency 
lying  idle,  and  when  there  is  a  currency  lying  idle  and  there  is  a 
demand  abroad  for  money  manifested  by  a  return  of  our  securities, 
the  only  money  that  can  be  sent  abroad  is  gold.  If  we  had  no 
more  currency  than  we  needed,  gold  would  not  go  abroad,  because 
more  would  not  be  paid  for  it  there  than  here,  as  is  the  case  now, 
as  it  would  be  needed  here. 

Mr.  LIVINGSTON.  Does  the  gentleman  believe  that  the  gold 
is  going  out  for  legitimate  purposes  or  for  speculation? 

Mr.  DINGLEY.  Undoubtedly  for  legitimate  purposes.  Men 
do  not  engage  in  any  business  except  for  what  in  trade  is  regarded 
as  legitimate,  namely,  for  the  purpose  of  making  money. 

Mr.  LIVINGSTON.     Or  speculation. 

Mr.  DINGLEY.  Oh,  everybody  engages  in  business  for  the 
purpose  of  making  money.  There  is  no  doubt  about  that.  If  gold 
were  worth  more  here  than  it  is  worth  abroad  it  would  not  be  go- 
ing out  under  present  conditions. 

But  there  is  another  reason  which  operates  and  which  I  think 
exercises  more  influence  than  that  which  I  have  named.  We  have 
borrowed  an  immense  amount  of  money  in  the  past  in  foreign 
countries  for  the  purpose  of  constructing  railroads  in  this  country, 
many  of  which  have  been  constructed,  perhaps,  ahead  of  the  ne- 
cessity for  them;  and'  the  bonds  which  we  have  issued  for  the 
money  we  have  borrowed  to  build  those  rt)ads  have  been  coming 
back  to  us.  Secretary  Carlisle  says  in  his  report  of  last  year  that 
at  least  $391,000,000  of  American  securities  came  back  to  this 
country  last  year,  and  were  sold  in  our  market,  necessarily  be- 
ing paid  for  by  shipments  of  gold.  On  the  face  of  the  case  what 
does  that  show?  It  shows  that  there  is  distrust  abroad  as  to  the 
financial  conditions  in  this  country?  Is  there  any  other  efiBlcient 
cause  for  this  return  of  our  bonds? 

Mr.  BLAND.  Can  not  that  be  explained  on  another  supposi- 
tion— that  they  require  gold  abroad  and  are  sending  securities 
here  to  get  our  gold? 

Mr.  BOUTELLE.  It  shows  that  they  would  rather  have  the 
gold  than  our  securities. 

Mr.  BLAND.     Certainly;  it  shows  they  must  have  the  gold, 
and  they  send  the  securities  here  iu  order  to  get  it.     There  is  not 
gold  enough  to  go  round. 
1733 


21 

Mr.  BOUTELLE.  They  would  not  want  the  gold  if  the  secu- 
rities were  worth  more  than  the  gold. 

Mr.  BLAND.  But  the  gold  is  worth  more  than  the  securities 
here,  and  there,  and  everywhere  else. 

Mr.  DINGLEY.  Why  do  these  gentlemen  who  send  our  secur- 
ities back  to  be  sold  in  our  markets  take  the  money  and  carry 
it  to  Europe  to  invest  it  in  European  securities?  Is  it  not  simply 
for  the  reason — I  will  not  say  whether  the  reason  is  a  good  one — 
they  distrust  the  financial  conditions  in  this  country? 

Mr.  BLAND.  When  the  Baring  Brothers  failed,  did  they  not 
have  to  get  gold  wherever  it  could  be  obtained,  and  did  they  not 
send  their  securities  to  this  country  for  that  purpose? 

Mr.  DINGLEY.     Certainly. 

Mr.  BLAND.  And  when  the  Austrian  Bank  required  gold,  did 
it  not  have  to  send  here  for  it? 

Mr.  DESTGLEY.     Oh,  that  was  a  temporary  condition. 

Mr.  BLAND.     Then  this  is  all  temporary. 

Mr.  DINGLEY.  Not  at  all.  It  was  not  until  the  spring  of  1893 
that  our  securities  began  to  be  returned  to  any  serious  extent,  and 
the  proceeds  reinvested  in  Europe.  Why  did  not  this  condition  of 
things  occur  long  ago?  Why  has  it  taken  place  within  the  last 
year  or  two,  and  not  before? 

Mr.  BLAND.  The  gentleman  understands  that  European  coun- 
tries are  in  financial  distress  as  well  as  ourselves,  that  times  are 
really  worse  there  than  here,  and  there  is  over  there  a  great  de- 
iiand  for  gold.  And  all  the  watered  railroad  securities  are  sink- 
ing, like  other  property,  during  this  demand  and  struggle  for  gold. 

Mr.  DINGLEY.  Is  not  the  gentleman  aware  that  there  is  more 
t^old  in  the  Bank  of  England  to-day,  and  also  in  the  Bank  of  France, 
than  there  has  been  for  a  long  time? 

Mr.  CANNON  of  Illinois.  Just  at  this  point  wiU  the  gentle- 
man from  Maine  aUow  me  to  suggest  that  silver  has  also  gone 
abroad  during  the  last  eighteen  months,  because  there  was  a  de- 
mand for  it? 

Mr.  BLAND.    At  what  price? 

Mr.  CANNON  of  Illinois.  At  the  world's  price,  the  same  as  in 
the  case  of  gold. 

Mr.  LIVINGSTON.  WUl  the  gentleman  from  Maine  allow  me 
a  suggestion? 

Mr.  DINGLEY.  Certainly,  I  yield  for  a  moment  to  the  gentle- 
man. 

Mr.  LIVINGSTON.  The  gentleman  will  allow  me  to  suggest 
that  the  return  of  those  securities  to  this  country  was  largely  con- 
sequent upon  European  losses  in  the  Argentine  Republic  and  other 
places,  and  did  not  result  from  the  fact  that  there  was  more  gold 
here  than  abroad  or  more  gold  abroad  than  here.  Is  it  not  true 
that  those  securities  were  returned  on  account  of  such  losses  as  I 
have  indicated? 

Mr.  DINGLEY.  Undoubtedly  to  a  certain  extent  that  waa 
true;  but  those  conditions  were  temporary  and  long  since  passed 
away;  those  are  not  the  conditions  which  have  affected  gold  ex- 
ports the  past  two  years. 

Mr.  LIVINGSTON.  Is  there  anything  to  show  that  there  have 
been  reinvestments? 

Mr.  BRYAN.  Is  it  possible  that  this  going  of  gold  abroad  ia 
1733 


22 

dne  to  the  fact  that  we  are  so  prosperous  that  we  have  been  pay- 
ing off  our  foreign  debt  and  holding  our  securities  at  home? 

Mr.  DINGLEY.  I  hardly  think  that  during  the  last  two  years 
the  wonderful  prosperity  which  the  gentleman's  question  would 
indicate  has  existed. 

Mr.  BRYAN.  Then  that  explanation  does  not  seem  to  the  gen- 
tleman a  satisfactory  one? 

Mr.  DINGLEY.    It  does  not. 

Mr.  WALKER.  K  the  gentleman  from  Maine  is  about  to  con- 
clude, will  he  kindly  allow  me  to  occupy  a  few  minutes  of  his 
time? 

Mr.  DINGLEY.    I  believe  I  had  concluded  what  I  desired  to 
say.    I  yield  the  residue  of  my  time  to  the  gentleman  from  Mas- 
sachusetts [Mr,  Walkee], 
1788 


THE  CONDITION  OF  THE  TREASUKY. 


SPEECH 


OF 


HON.  ARTHUR  P.  GORMAN, 


OF     MARYLAND, 


SENATE  OF  THE  UNITED  STATES, 


Monday,  January  14,  1895. 


"WASHINGS-TON". 

1895. 


SPEECH 

OF 

HON.  ARTHUE  P.  GORMAN. 


The  Senate  having  under  consideration  the  bill  (H.  B.  8148)  making  appro- 
priations to  supply  urgent  deficiencies  in  the  appropriations  for  the  fiscal 
year  ending  June  30, 1895,  and  for  other  purposes- 
Mr.  GORMAN  said: 

Mr.  President:  The  proposition  pending  before  the  Senate  is  a 
simple  and  plain  one.  The  debate  has  taken  a  very  wide  range, 
(jovering  mimerous  subjects,  all  of  importance;  but  after  all,  the 
question  before  the  Senate  is,  as  I  have  said,  a  simple  and  plain 
one.  An  appropriation  bill  has  reached  this  body  providing  for 
the  deficiencies  which  have  occurred  because  of  legislation.  Among 
other  provisions  in  the  general  revenue  law  passed  in  August  last, 
a  tax  was  levied  upon  the  incomes  of  individuals  exceeding  $4,000 
per  annum,  and  a  certain  tax  was  levied  upon  corporations  within 
the  United  States.  It  was  made  the  duty  of  the  Secretary  of  the 
Treasury,  under  such  regulations  as  he  might  prescribe,  to  enforce 
that  law.  It  is  mandatory.  It  is  the  duty  of  Congress  to  provide 
the  money  to  enable  the  Secretary  to  carry  out  the  provisions  of 
the  law.  Ordinarily  there  would  not  be  a  single  objection  in 
either  House  of  Congress  to  a  proposition  such  as  I  have  stated. 

The  senior  Senator  from  New  York  [Mr.  Hill]  and  the  junior 
Senator  from  Pennsylvania  [Mr.  Quay]  have  offered  amendments 
to  this  simple  provision  of  an  appropriation  bill.  The  amend- 
ments offered  by  those  two  distiaguished  Senators  are  identical  in 
language.  The  one  offered  on  the  9th  day  of  January  by  the  Sen- 
ator from  Pennsylvania  is  the  same  amendment  as  that  proposed 
by  the  Senator  from  New  York  on  the  10th.  The  Senator  from 
New  York  in  his  recent  speech  advocating  his  amendment  used 
the  following  language,  to  be  found  on  page  932  of  the  Record: 

The  law  has  been  passed.  I  have  no  expectation  that  this  Congress  will 
repeal  it.    I  put  a  stress— 

Says  the  Senator  from  New  York — 

upon  the  words  "this  Congress."  It  is  the  Congress  that  enacted  it.  Now, 
there  conies  an  appropriation  to  carry  it  out.  I  concede  the  general  rule  to 
be  that  there  ought  to  be  an  appropriation  to  carry  out  every  existing  law 
duly  enacted. 

Further  on  in  his  speech,  on  page  933  of  the  Record,  the  Sen- 
ator from  New  York  said: 

But,  sir,  I  stand  here  to  resist  any  legislation  that  seeks  to  take  moneys 
from  the  citizens  of  my  State  by  statute  when  Congress  refuses  to  provide  a 
remedy  by  which  the  constitutionality  of  that  statute  can  be  tested. 

1758  3 


Mr.  President,  the  Senator  from  Ohio  [Mr.  Sherman]  has  so 
clearly  pointed  out  to  the  Senate  and  the  country  that  there  is 
ample  provision  for  any  citizen  of  the  United  States  to  test  the 
constitutionality  of  the  income-tax  law,  or  any  other  law,  that  it 
is  not  necessary  for  me  or  for  anyone  else  to  discuss  further  that 
question.  The  right  to  test  the  constitutionality  of  the  law  exists. 
What  the  Senator  from  New  York  desires  is  a  provision  separate 
and  distinct,  exceptional  in  this  case,  which  will  enable  any  tax- 
payer in  the  United  States  who  is  liable  to  pay  the  tax  to  sus- 
pend its  collection  by  injunction,  to  reverse  the  rule  in  this  par- 
ticular case,  and  prevent  the  money  which  should  come  into  the 
Treasury  under  the  law  from  reaching  its  portals  until  every  ques- 
tion that  may  be  raised  by  every  unwilling  taxpayer  in  the  coun- 
try shall  have  been  decided  by  the  Supreme  Court  of  the  United 
States.  While  the  Senator  concedes  that  the  appropriation  ought 
to  be  made,  he  would  by  this  method  render  the  statute,  for  the 
time  being,  absolutely  null  and  void. 

The  distinguished  Senator  from  Pennsylvania  [Mr.  Quay],  a 
little  more  frank  and  direct,  in  presenting  the  same  amendment 
offered  by  the  distinguished  Senator  from  New  York,  used  the 
following  language,  which  will  be  found  on  page  935  of  the  Reo 
ORD: 

The  appropriation  proposed  to  pay  for  the  expense  of  the  collection  of  thla 
discredited,  inquisitorial,  and  obnoxious  levy  upon  the  private  business  of 
the  people  of  this  country  should  be  at  least  postponed. 

Warming  up  to  his  subject,  he  added: 

It  should,  indeed,  be  absolutely  defeated.  The  income-tax  proTision  of  the 
last  tarifE  law  should,  so  far  as  the  votes  of  this  body  we  able  to  accomplish 
it,  bo  made  absolutely  nugatory. 

There  we  have  the  clear,  undoubted  object  of  both  the  Senator 
from  New  York  and  the  Senator  from  Pennsylvania. 

It  is  not  necessary  in  this  presence  to  assert  the  fact  that  the 
Senate  of  the  United  States  has  no  power  under  the  Constitution 
to  originate  any  measure  which  reduces  or  adds  to  the  revenue. 
Such  a  proposition  can  come  only  from  the  coordinate  branch, 
and  when  it  does  reach  this  body  it  is  within  our  power  to  amend 
it  and  change  it  as  radically  as  we  see  proper.  But  the  Senate 
has  no  moral  or  legal  right  on  an  appropriation  bill  to  change  the 
revenue  laws.  Sir,  I  say  without  the  slightest  hesitation  that  the 
attempt  to  do  it  in  the  indirect  manner  in  which  it  is  proposed 
would  be  wrong,  would  be  without  our  power,  and  would  operate,  if 
the  House  of  Representatives  should  consent  to  such  a  proposition, 
most  destructively  to  the  interests  of  the  Treasury.  If  such  a 
proposition  could  be  properly  made,  if  we  had  the  power  to  enact 
it,  I  submit  that  no  Senator  acting  upon  his  responsibility,  no 
matter  on  which  side  of  the  aisle  he  may  have  a  seat,  would  be 
justified  in  presenting  it,  unless  he  could  show  that  the  tax  which 
has  been  imposed  by  the  law  is  unnecessary  for  the  support  of  the 
Government;  that  the  Treasury  is  in  such  a  condition  as  to  war- 
rant the  reduction  or  suspension.  If  the  Treasury  is  not  in  that 
condition  it  would  necessarily  be  his  duty,  if  he  had  the  interests 
of  the  people  of  the  country  at  heart,  to  propose  instead  a  tax 
which  would  prevent  a  deficiency  in  the  Treasury. 

Mr.  QUAY.  Will  the  Senator  from  Maryland  allow  me  to  in- 
terrupt him  for  a  moment  ? 

Mr.  GORMAN.    With  great  pleasure. 
1758 


Mr.  QUAY.  The  Senator  from  Maryland  will  have  noticed 
that  I  introduced  amendments  which  propose  to  supply  the  de- 
ficiency in  the  revenue,  first  by  reenacting  the  McKinley  law. 
Another  proposition  was  to  reenact  the  tax  upon  wool  and  to  sup- 
plement that  by  a  duty  upon  woolens. 

Mr.  GORMAN.  I  understand  the  Senator  from  Pennsylvania 
for  one  purpose  or  another  offered  those  amendments,  but,  of 
course,  with  perfect  knowledge  on  his  part  that  they  are  not  ger- 
mane to  any  bill  pending  in  the  Senate,  or  up  for  consideration  in 
the  Senate;  at  all  events  not  upon  an  appropriation  bill.  The 
question  involved  in  the  amendments  suggested  by  the  Senator 
can  only  come  up  when  there  is  pending  a  bill  providing  revenue 
for  the  Government.     It  has  no  place  here  now. 

Mr.  President,  the  policy,  the  desirability,  the  legality  of  the 
tax  known  as  the  income  tax  is  not  before  this  body  for  consid- 
eration, although  the  question  has  been  very  ably  discussed  by 
the  distinguished  Senator  from  New  York  [Mr.  Hill]  .  I  shall 
not  detain  the  Senate  to  again  express  my  views  as  to  the  income  tax. 
I  did  that  at  the  only  tune  when  it  could  properly  be  done — when 
the  bill  to  reduce  taxation  was  before  the  Senate  for  consideration. 
I  have  nothing  to  retract  from  what  I  said  then.  I  agreed  with 
much  the  distinguished  Senator  from  New  York  himself  said  as 
to  the  policy  of  such  a  tax.  I  was  opposed  to  the  Government 
entering,  as  a  permanent  policy,  upon  that  system  of  levying 
taxes.  On  the  23d  of  May  Last,  when  the  revenue  bill  was  under 
consideration,  I  said: 

In  the  matter  of  internal  revenue,  I  may  say  that  personally  I  am  in  full  ac- 
cord with  the  sentiments  so  ably  and  eloquently  expressed  by  the  Senators 
from  New  York  and  New  Jersey  regarding  the  income  tax.  Like  them,  I  con- 
sider that  it  served  its  purpose  as  a  war  tax,  and  has  no  fitting  place  in  our 
fiscal  system  in  a  time  of  peace.  I  could  not,  I  say  frankly,  vote  conscien- 
tiously or  consistently  with  my  judgment  and  convictions  to  make  this  method 
of  taxation  a  part  of  our  settled  policy.  But,  much  as  I  deplore  the  fastening 
of  an  income  tax  in  any  form  upon  our  tariff  bill,  I  can  not  ignore  the  fact 
that  a  large  majority  of  my  Democratic  colleagues  honestly  differ  from  my- 
self in  this  matter,  and  are  so  confident  of  the  soundness  of  their  position 
that  they  are  willing  to  subject  it  to  the  test  of  a  few  years,  thus  enabling  the 
people  to  see  its  actual  workings  and  then  pass  upon  it  directly. 

In  these  circumstances,  and  m  view  of  the  necessity  of  obtaining  additional 
revenue  from  some  source  if  we  would  reduce  customs  taxation,  without  dis- 
avowing the  frightful  financial  obligations  heaped  up  by  Republican  legis- 
lation or  further  increasing  the  debt  of  the  Government,  I  can  not,  as  a  Demo- 
crat, bound  in  honor  to  let  no  ordinary  prejudice  or  difference  in  opinion 
prevent  the  passage  of  a  tariff  measure,  refuse  to  vote  for  this  amendment, 
simply  and  solely,  however,  as  an  emergency  tax. 

Mr.  President,  I  accepted  the  income  tax  as  a  part  of  a  compro- 
mise of  a  great  reform  measure  of  tax  legislation.  I  accepted  it 
because  I  knew  then,  as  I  know  now,  that  that  tax,  with  the  frame 
of  the  biU  such  as  we  had  and  could  only  have,  was  absolutely 
necessary  to  prevent  a  deficiency  in  the  Treasury.  I  accepted  it 
as  an  eraergency  tax,  limited  in  time,  and  necessary  to  prevent 
the  issiiance  of  interest-bearing  bonds  of  the  Government  to  pay 
the  ordinary  current  expenses  from  year  to  year.  It  is  there  as  a 
part  of  that  structure  for  which  we  are  responsible.  It  is  a  neces- 
sary part,  if  Congress  proposes  to  give  the  Treasury  as  much 
money  as  it  appropriates  for  expenses.  Any  delay,  any  hamper- 
ing of  its  collection,  or  any  attempt  to  prevent  its  collection  sim- 
ply means,  as  the  case  stands  to-day,  to  strike  from  the  tax  list  all 
taxes  on  incomes,  and  vote  for  bonds  to  pay  the  current  expenses. 

1758 


I  aTu  not  for  such  a  plan,  but  the  proposition  of  the  Senator  from 
New  York  and  the  Senator  from  Pennsylvania  is  that  and  that 
alone. 

Mr.  President,  this  Government  is  controlled  by  parties,  and 
never  in  its  history  has  either  of  the  great  parties,  in  framing  a 
revenue  measure,  gone  to  work  deliberately  to  cut  the  receipts 
below  the  expenditures.  That  condition  has  occurred  two  or  three 
times  in  the  history  of  the  Government  by  the  error  of  the  men 
who  made  the  estimates  of  the  revenue  which  would  be  produced 
under  the  proposed  law.  It  has  occurred  now  again.  When  we 
considered  the  bill  that  came  here  from  another  House  it  was  an 
easy  and  comfortable  matter  for  any  member  of  the  majority  in 
this  body,  for  any  member  of  the  other  side,  or  for  reformers  here 
and  elsewhere,  to  pose  as  the  special  champions  of  decreased  taxa- 
tion; and  I  suppose  it  added  to  the  popularity  of  an  individual  to 
stand  here  or  elsewhere  and  denounce  a  tax  that  happened  to 
be  unpopular  without  apparently  having  the  slightest  concern 
whether  the  Government  should  or  should  not  be  banki-upt. 

NeA'er  in  the  history  of  the  land  has  there  been  such  an  oppor- 
tunity for  demagogues  as  in  these  troublesome  times,  when  men 
in  all  occupations  of  life  have  been  most  solicitotas  for  their  concerns 
and  anxious  to  know  what  wovild  become  of  private  business  and 
public  affairs.  But  there  were  those  of  us  who  believed  that  an 
intelligent  people,  free  and  independent,  would  not  tolerate  any 
scheme  made  by  their  public  servants  in  either  or  both  branches 
of  Congress  which  failed  to  raise  enough  revenue  to  pay  ordinary 
expenses  as  we  went  along,  and  that  the  people  would  condemn 
their  representatives  for  such  action.  No  party  can  live  which 
deliberately  cuts  down  the  receipts,  while  keeping  up  the  expendi- 
tures, and  then  issues  gold  bonds  by  the  hundred  milli»n  dollars' 
worth  to  pay  the  ordinary  expenses.  Yet,  sir,  that  is  precisely  the 
proposition  which  has  been  presented  to  this  body.  It  is  the  pre- 
cise proposition  which  is  advocated  elsewhere  and  which  caused 
complaint  against  the  Senate  through  the  public  press  when  it 
proposed  to  add,  and  did,  as  we  thought,  add,  sufficient  revenue  to 
a  bill  that  came  here  which  was  totally  deficient  in  revenue-pro- 
ducing capacity.  That  responsibility  had  to  be  taken.  It  was 
taken;  it  was  taken  by  the  Senate,  as  it  has  always  been  taken  by 
this  body,  by  deliberation,  by  consideration,  by  weighing  every 
item  that  was  to  be  passed  upon.  Having  in  mind  all  these  con- 
siderations, the  compass  by  which  we  were  guided  was  that  the 
act  must  produce  revenue  enough  to  support  the  Government. 

Have  we  done  it.  Senators?  No.  In  our  anxiety  to  carry  out 
party  pledges,  to  reduce  taxation,  to  prevent  favoritism,  this 
great  body,  organized  and  created  for  the  purpose  of  resisting  the 
popular  waA'es,  and  standing  for  justice  and  right  when  other 
men  would  bend  to  the  storm,  was  swayed  by  popular  clamor  and 
the  great  power  of  the  American  press  and  cut  too  close,  reduced 
too  much.  It  is  true,  sir,  that  we  added  about  $60,000,000  per 
annum  to  the  revenue  biU  that  came  here  from  another  branch  of 
the  Government.  Sixty  million  dollars  per  annum  did  we  add  to 
the  measure  kno'^\Ti  as  the  Wilson  bill,  as  it  came  from  the  House 
of  Representatives.  I  for  one  supposed  when  we  had  made  those 
additions,  necessary  for  the  support  of  the  Government,  that  we 
had  added  a  sufficient  amount  to  pay  all  the  current  expenses  of 
1768 


the  Treasury.  Had  I  not  believed  so,  and  believed  it  from  the 
estimates  made  by  the  Treasury,  I  never  should  have  voted  for 
the  bill  as  we  finally  put  it  in  form  without  further  provisions 
creating  more  revenue. 

The  storm  that  has  swept  over  the  country,  alluded  to  by  the 
distinguished  Senator  from  Pennsylvania  [Mr.  Quay]  in  terms 
far  from  complimentary  to  the  Democratic  party,  was  a  storm 
based  in  part  upon  misinformation.  It  was  believed  universally 
that  this  body  stood  here  and  kept  up  a  high  rate  of  taxation, 
higher  than  was  necessary.  I  fully  believe  that  nine-tenths  of 
the  Democratic  party  thought  we  had  failed  to  carry  out  the 
promises  as  they  stood  in  the  platform  made  at  Chicago.  But 
there  was  no  time  then  for  them  to  \mderstand;  the  time  is  only 
now,  when  they  at  last  begin  to  understand  and  to  know — for 
the  truth  is  mighty  and  will  prevail — that  the  reductions  we 
made  were  too  radical,  as  the  law  will  not  for  this  year,  and  prob- 
ably the  next,  produce  enough  revenue  to  meet  the  expenditures 
of  the  Treasury. 

Instead  of  deliberating  too  much  in  this  body,  as  the  distin- 
guished Senator  from  New  York  claims,  if  we  had  only  deliber- 
ated longer,  if  we  had  only  gone  more  carefully  into  the  estimates 
furnished,  we  would  have  saved  the  necessity  of  the  issuance  of  a 
part  of  the  $100,000,000  of  bonds  recently  issued,  and  would  have 
prevented  the  further  issuance  of  bonds  this  year  to  pay  the  ordi- 
nary expenses  of  the  Government. 

Mr.  VEST.    May  I  ask  the  Senator  from  Maryland  a  question? 

Mr.  GORMAN.    With  great  pleasure,  sir. 

Mr.  VEST.  I  understand  the  Senator  to  state  that  upon  esti- 
mates, whether  they  be  official  or  made  by  himself  I  do  not  know, 
for  the  fiscal  year  ending  June  30, 1896,  there  wiU  not  be  revenues 
enough  to  carry  on  the  Government.    Is  that  his  statement? 

Mr.  GORMAN.    Practically. 

Mr.  VEST.  Does  the  Senator  take  into  that  consideration  or 
estimate  the  amount  that  will  be  brought  into  the  Treasury  by 
the  40  per  cent  tax  upon  sugar  and  by  the  whisky  tax,  neither  of 
which  is  available  for  this  year,  but  will  be  for  1896,  beyond  ques- 
tion? 

I  wish  to  call  the  attention  of  the  Senator  to  the  fact  that  from 
the  returns  of  the  Treasury  Department  there  has  been  a  steady 
increase  in  the  receipts  of  the  Government  for  the  last  three 
months.  I  think  I  can  state,  without  having  the  written  olHcial 
statement,  or  upon  information  derived  from  the  Treasury  Depart- 
ment, that  it  is  only  a  reasonable  anticipation  to  presume  that  about 
the  1st  of  April  the  receipts  of  the  Government  will  be  sufficient 
to  pay  its  ordinary  expenses. 

But  the  question  I  immediately  put  to  the  Senator  is  whether 
for  the  fiscal  year  1896  he  takes  into  consideration  the  $40,000,000, 
at  least,  that  we  shall  receive  upon  sugar  from  the  40  per  cent  tax 
and  the  additional  tax  upon  whisky  which  we  have  imposed  by 
the  increase  of  the  internal-revenue  taxation  upon  that  article. 

Mr.  GORMAN.  Mr.  President,  I  shall  not  vnthout  authority 
speak  upon  this  question.  I  will  let  a  man  answer  it  who  I  know 
commands  the  resi)ect  of  every  Democrat  in  the  United  States, 
whom,  while  I  have  differed  with  him  in  the  past,  and  do  now  in 
many  of  his  ideas,  I  regard  as  the  foremost  man  in  finances  in  the 
1758 


8 

party,  the  one  selected  by  the  President  of  the  United  States  to 
preside  over  the  Treasury  Department,  who  in  all  the  terrific  tur- 
moil through  which  we  have  passed,  has  stood  for  a  tax  sufficient 
to  support  the  Government,  who  has  had  the  courage,  when  slan- 
der was  rampant  and  the  vipers  were  striking  at  him,  to  stand  and 
to  tell  an  excited  Congress  who  wanted  to  cut  off  $50,000,000  of  the 
revenue  provided  in  that  act,  "  You  can  not  do  it  without  putting 
the  Treasury  in  jeopardy."  I  wiD  let  him  answer  the  question  of 
the  Senator  from  Missouri,  and  I  will  do  it  a  little  later  on,  if  the 
Senator  will  pardon  me. 

Mr.  President,  I  repeat,  you  can  not  eliminate  a  single  provision 
of  the  late  tariff  act  that  brings  revenue  into  the  Treasury  with- 
out substituting  something  in  its  place  that  will  produce  an  equal 
amount  of  revenue.  I  repeat,  sir,  there  is  no  justification,  there 
can  be  no  excuse,  for  any  Senator  to  propose  a  reduction  unless 
he  can  show  that  this  body  at  the  same  time  can  legally  add  to 
the  revenues  an  equal  amount  by  some  other  provision,  and  that 
can  not  be  done. 

No  party  in  the  history  of  this  country  in  times  of  peace  ever 
faced  such  difficulties  as  confronted  the  Democratic  party  when 
Mr.  Cleveland  was  inaugurated  upon  the  4th  of  March,  1893. 
The  distress  throughout  the  country  was  widespread.  It  was 
only  beginning,  possibly,  but  it  was  still  widespread,  and  it  has 
grown  in  volimie  from  that  day  to  this.  A  depleted  Treasury, 
with  enormous  expenditures,  was  the  condition  that  confronted 
our  great  Secretary  of  the  Treasury.  Business  was  stagnant  and 
trade  and  commerce  were  hampered.  The  prices  of  all  com- 
modities were  falling  lower  and  lower.  Banks  were  suspending, 
and  there  were  defects  in  oiu*  currency  laws.  It  is  no  wonder 
that  we  have  had  conflicts  within  our  own  ranks;  that  we  have 
had  divisions  here  and  elsewhere;  that  we  have  had  disappoint- 
ments; tnat  we  have  had  failures  in  our  attempts  to  remedy  all 
these  evils.  But,  sir,  it  Avill  be  truthfully  said  by  him  who 
writes  the  history  of  this  time,  when  he  is  far  enough  removed 
from  the  personalities  of  the  hour;  from  the  ambitions  of  men, 
from  their  desire  to  gain  i:)opularity;  when  he  collects  and  sums 
up  carefully  he  will  truthfully  say  that  never  since  the  adoption 
of  the  Constitution  has  any  Congi-ess  done  so  much  benefit  to  the 
people  of  the  country  as  has  been  done  by  the  present  Congress. 

Mr.  GRAY.    May  I  interrupt  the  Senator  for  a  moment? 

Mr.  GORMAN.     Certainly. 

Mr.  GRAY.  In  order  that  the  Senator  may  be  clear  in  his 
statement  let  me  ask  him  whether  he  means  to  be  understood — I 
have  not  so  understood  him — that  the  revenue  laws  displaced  by 
the  legislation  of  last  summer  were  producing  sufficient  revenues 
to  meet  the  wants  of  the  Government? 

Mr.  GORMAN".  Not  at  all.  The  Senator  has  only  anticipated 
what  I  will  come  to  in  my  ovm  way  a  little  later  on,  although  I 
am  indebted  to  him  for  the  inquiry. 

Mr.  President,  I  do  not  believe  that  there  ever  was  a  more  haz- 
ardous undertaldng  than  the  thorough  revision  of  the  revenue 
laws  of  this  country  at  the  time  at  which  the  Democratic  party 
attempted  to  do  it.  The  conditions  of  the  country,  to  which  I 
have  simply  alluded,  were  of  themselves  enough  to  make  us  hesi- 
tate, and  would,  in  my  judgment,  have  been  sufficient  to  have 
justified  us  to  stop  and  halt  and  wait  until  the  affairs  of  the  world 

1758 


and  of  tile  country  were  in  a  better  financial  state.  But  the  pledge 
of  the  party  was  so  emphatic,  so  often  made,  that  we  could  not 
delay.  We  were  bound  to  march  forward  to  the  redemption  of 
our  pledges,  no  matter  what  the  immediate  result  in  a  political 
point  of  view  would  be  to  the  party  in  power.  Speaking  for  my- 
self, looking  at  the  history  of  the  country  and  of  the  parties,  I 
never  doubted  that  if  we  did  remodel  the  tariff  law,  no  matter  how 
perfect  our  provisions  might  be,  it  would  lead  us  to  defeat  at  the 
following  election.  It  was  only  a  question — I  speak  for  myself 
alone — whether  we  would  postpone  the  time  of  carrying  out  our 
obligations,  or  do  it  then  with  a  perfect  belief  on  my  part  that  to 
do  it  would  put  this  side  temporarily  in  the  minority. 

We  concluded,  sir,  in  our  wisdom,  to  go  on  and  carry  out  our 
pledges  and  perfect  the  law.  It  was  a  compromise  measure,  as 
was  said  recently  by  the  Senator  from  New  York  [Mr.  Hill]  in 
the  discussion  of  this  income-tax  provision — as  he  puts  it,  "the 
WUson-Grorman-Brice-Smith  bill,  or  whatever  it  is."  Mr.  President, 
it  was  a  compromise  bill;  and  no  tariff  bill  could  ever  have  passed 
the  Senate,  constituted  as  it  was,  except  by  a  compromise  among  its 
friends.  It  was  a  compromise  bill  to  which  every  Democratic 
Senator  except  the  Senator  from  New  York  agreed. 

Mr.  VOORHEES.    Every  tariff  bill  has  been  a  compromise. 

Mr.  GrORMAN.  There  never  was  a  tariff  bill  that  was  not  a 
compromise.  That  measure  was  a  compromise,  and  as  a  whole, 
as  it  stands  to-day,  it  is  the  act  of  the  Democratic  party.  It  is  the 
best  act  that  has  been  placed  upon  the  statute  books  for  thirty 
years.  The  Senator  from  New  York  was  not  a  party  to  that  com- 
promise. There  is  something  in  the  atmosphere  of  northern  New 
York  which,  it  seems,  makes  it  impossible  for  a  statesman  from 
that  section  ever  to  compromise.  It  was  the  McKinley  Act  or  this 
one,  and  the  Senator,  as  he  had  a  right  to  do,  and  he  did  it  openly 
and  manfully,  told  his  colleagues  on  this  side  of  this  Chamber, 
"  either  give  me  my  way  or  you  shall  never  pass  a  bill."  It  was 
his  right  and  he  did  it  openly.  He  went  directly  at  it,  and  I 
always  admire  a  bold  man. 

In  that  compromise  measure  we  placed  a  tax  on  incomes.  I 
could  excuse  the  Senator  from  New  York  for  antagonizing  this 
provision,  if  it  were  not  for  the  fact  that,  while  we  were  consider- 
ing the  tariff  bill,  he  not  only  opposed  the  income-tax  feature, 
which  I  have  shown  is  necessary  for  the  support  of  the  Govern- 
ment for  the  time  being,  but  he  joined  with  all  the  extreme — I  do 
not  use  any  offensive  phrase,  I  beg  Senators  to  know  that  I  do 
not — with  aU  the  extreme  tariff  reformers  who  wanted  to  cut 
down  the  revenue  from  the  imports  on  goods  brought  in.  He 
was  ready  in  that  case  to  cut  those  down  and  to  eliminate  the  in- 
come tax  also;  and,  judging  by  his  vote,  if  he  had  had  his  way 
he  would  have  had  $500,000,000  of  bonds  to  issue  to  pay  the  cui-- 
rent  expenses  of  the  Grovernment  between  that  time  and  1897. 

Mr.  President,  I  can  never  foUow  a  leader  in  this  body  or  else- 
where who  would  deliberately  put  this  Government  in  a  position 
to  increase  the  national  debt  to  pay  its  current  expenses.  I  do  not 
believe  a  national  debt  is  a  blessing.  I  have  no  sympathy  with 
the  men  who  proclaim  themselves  advanced  reformers,  and  who 
under  the  guise  of  reform  want  to  increase  the  national  debt  so 
that  bonds  of  the  United  States  can  be  trafficked  in  or  invested 
in.  because  the  Government  bonds  are  exempt  from  taxation  of 
1758 


10 

ev(»ry  sort  and  description,  national  and  State.  I  prefer  that  the 
thrifty  and  the  enterprising  shall  have  the  opportunity  to  put 
their  money  in  private  enterprises,  and  pay  their  full  and  just  share 
of  taxation  for  the  support  of  the  city,  the  State,  and  the  National 
Government. 

It  was  upon  that  theory  and  upon  those  conditions  that  I  for 
one  stood  in  this  body  with  no  little  personal  inconvenience,  with 
the  full  knowledge  that  a  large  number  of  my  associates  on  this 
side  of  the  Chamber  were  disappointed  because  I  could  not  with 
my  convictions  vote  with  them  for  lower  rates  of  duty  on  sundry 
articles,  because  it  was  my  conviction  that  to  do  so  would  tend  to 
bankrupt  the  Treasury  and  create  a  debt  by  the  issue  of  bonds. 
It  was  not  a  view  made  up  for  the  hour  or  in  the  consideration  of 
that  bill  when  it  came  from  the  other  House.  It  had  happened  to 
be  my  diity  (in  conjunction  with  my  distinguished  friend,  the  Sen- 
ator from  Missouri  [Mr.  Cockrell]  ,  as  members  of  the  Committee 
on  Appropriations,  then  in  the  minority  as  we  were)  to  follow 
closely  the  operations  of  the  Treasury,  before  we  had  our  great  suc- 
cess in  1893,  when  Mr.  Cleveland  was  elected  by  an  overwhelming 
majority. 

When  you  on  ihe  other  side  controlled  every  branch  of  the 
Government,  when  you  had  the  President  and  both  Houses  of 
Congress  and  the  Supreme  Court — the  whole  Government — under 
your  control,  the  Senator  from  Missouri  and  myself  pointed  out 
to  you  and  to  the  country,  as  far  as  we  could  be  heard,  that  the 
revenue  laws  you  had  enacted — the  McKinley  Act — produced  an 
insufficient  amount  of  revenue,  and  that  you  had  left  the  Treas- 
ury without  sufficient  revenue.  I  was  frank  enough  to  say,  be- 
cause it  was  the  truth,  that  you  did  not  do  it  deliberately;  that 
you  had  no  intention  of  creating  the  deficit. 

I  do  not  believe  that  the  distinguished  Senator  from  Iowa  [Mr. 
Allison]  ,  the  Senator  from  Rhode  Island  [^Ir.  Aldrich]  ,  the 
venerable  Senator  fi-om  Vermont  [Mr.  Morrill]  ,  and  the  Sena- 
tor from  Ohio  [INIr.  Sherman]  ,  the  then  leading  members  of  the 
Committee  on  Finance,  would  deliberately  do  an  act  of  that  kind. 
But  the  fact  was  that  the  estimates  upon  which  you  based  your 
bill  were  at  fault,  just  as  the  estimates  on  which  we  based*^  the 
late  tariff  act  were  at  fault.  The  most  experienced  men  in  the 
Treasury,  who  made  your  estimates  and  who  made  ours,  could  not 
measure  the  great  depression  that  has  spread  over  the  world.  No 
man  could  have  thotight  in  1890,  no  man  thought  in  1892,  that  the 
prices  of  all  the  staple  articles  would  be  25  per  cent  cheaper  than 
was  ever  known  in  the  history  of  the  world;  and  that  would  of 
necessity  affect  the  revenues.  With  normal  conditions,  even  with 
fair  conditions,  the  McKinley  Act  would  have  produced  a  revenue 
equal  to  the  expenditures.  If  the  tariff  act  that  we  passed  had 
had  the  same  conditions  it  would  have  given  a  surplus  of  from 
forty  to  fifty  million  dollars  per  annum,  which  could  have  been 
applied  toward  liquidating  the  national  debt. 

Now,  ]\Ir.  President,  I  come  to  the  suggestion  made  by  the  dis- 
tinguished Senator  from  Missouri  [Mr.  Vest]  as  to  whether  it  is 
a  fact  that  the  act  of  August  last  will  not  produce  sufficient  reve- 
nue. The  tariff  bill  as  it  came  from  the  House  of  Representatives 
to  this  body  carried  a  revenue,  as  estimated  at  that  time,  of  about 
$37.5,000,000.  It  came  here  for  consideration.  The  distinguished 
Senator  on  my  left,  the  Senator  from  Indiana  [Mr.  Voorhees]  , 
1758 


11 

chairman  of  the  Finance  Committee,  and  his  colleagues  on  that 
committee  weighed  the  result  of  that  measure.  I  do  not  desire  to 
discuss  the  little  differences  among  Democrats,  which  amounted 
to  nothing  in  the  past  and  can  amount  to  nothing  in  the  future,  as 
to  action  upon  a  particular  item,  whether  the  rate  should  be  a  third 
or  a  quarter  of  a  cent.  That  is  a  matter  of  detail  and  amounts  to 
nothing;  but  the  Senator  from  Indiana  looked,  as  I  know,  to  the 
main  question,  "  Will  the  bill  produce  revenue  enough  to  support 
the  Government?  "  In  a  public  declaration  in  the  Senate  and  out- 
side of  the  Senate  he  declared  emphatically  that  it  would  not,  and 
that  it  was  mere  idle  nonsense  for  people  to  talk  about  passing  the 
bill  as  it  came  from  the  House  of  Representatives. 

Mr.  VOORHEES.  In  this  connection  it  may  not  be  improper 
for  me  to  state  that  in  April  last  I  published  at  length  in  the  press 
of  my  own  State  my  views  in  regard  to  the  situation,  and  in  that 
publication,  widely  circulated,  I  drew  attention  to  the  fact  that 
the  bill  as  it  came  to  us  from  the  House  of  Representatives  would 
inevitably  make  a  deficiency  of  at  least  $30,000,000  from  the  start. 
I  knew  from  the  beginning  that  it  was  not  a  revenue  bill  of  suffi- 
cient proportions,  and  because  of  that  fact,  we  added  to  it, 
as  the  Senator  from  Maryland  has  said,  at  least  $60,000,000.  In- 
asmuch as  I  am  on  my  feet,  the  Senator  from  Maryland  will  par- 
don me  for  saying  that  in  a  very  short  time  the  provisions  will  be 
ample  in  amount  for  the  revenues  of  the  Government.  In  the 
meantime,  however,  I  do  not  disguise  from  myself  the  perils 
which  surround  us. 

Mr.  GORMAN.  I  am  much  obliged  to  the  Senator  from  Indi- 
ana for  the  statement.  As  the  Senator  states,  we  added  to  that 
bill  $54,593,712.84. 

Mr.  VOORHEES.    That  is  a  very  low  estimate. 

Mr.  GORMAN.  It  is  a  very  low  estimate,  but  we  certainly 
added  that  amount.  Now,  Mr.  President,  what  is  the  result  of 
the  operation  for  the  present  year?  I  vsdll  let  the  Secretary  of  the 
Treasury  answer  the  question.  You  will  find  in  his  late  report 
that  for  the  fiscal  year  ending  June  30,  1894,  under  the  operation 
of  the  old  law,  the  deficit  was  $69,803,260.58;  that  is  to  say,  that 
the  actual  payments  from  the  Treasury  were  greater  than  the  re- 
ceipts into  the  Treasury  by  nearly  $70,000,000,  under  the  opera- 
tions of  theMcKinley  Act;  and,  notwithstanding  the  expenditures 
of  the  Government,  the  payments  out  of  the  Treasury  were  fifteen 
million  nine  hundred  and  fifty-two  thousand  and  odd  dollars  less 
than  they  were  the  year  before;  that  is,  the  last  year  of  the  Mc- 
Kinley  Act. 

The  Secretary  of  the  Treasury  in  this  same  report  estimates  that 
there  will  be  a  deficit  on  the  1st  day  of  July,  1895,  of  $30,000,000 
under  the  operations  of  the  McKinley  law  from  July  to  the  26th 
of  August,  the  date  when  the  recent  act  went  into  effect.  That  is 
an  estimate— the  best  estimate  he  can  get.  Yet,  Mr.  President,  on 
the  12th  day  of  this  month  the  statement  of  the  Treasury  Depart- 
ment, made  since  the  report  of  the  Secretary  of  the  Treasury, 
shows  what?  That  the  deficit,  the  excess  of  expenditures,  as  he 
puts  it.  over  the  receipts  from  July  1  last  until  the  12th  day  of  the 
present  month  is  $34,464,121.13,  showing  that  the  estimates  made 
honestly,  made  with  the  same  set  of  old  and  skilled  offi(;ers  who 
have  heretofore  made  them,  differ  widely  from  the  actual  opera- 
tions of  the  Department.     The  statement  of  the  condition  of  the 

1758 


12 

Treasury  and  the  receipts  and  expenditures  of  the  Government  on 
the  12th  day  of  January,  1895,  shows  the  following: 

Receipts  and  expenditures  of  the  Oovei-nment  from  July  1,  1S9U,  to  January  U, 

1S05. 

Total  receipts $171,309,980.72 

Total  expenditures 205,774,101.85 

Excess  of  expenditures  over  receipts 34,404,121.13 

[At  this  point  the  honorable  Senator  was  interrupted  by  the 
expiration  of  the  morning  hour,  and  by  unanimous  consent  the 
unfinished  business  was  temporarily  laid  aside  that  the  appro- 
priation bill  might  be  proceeded  with.] 

Mr.  GORMAN.  Mr.  President,  I  was  saying  that  the  estimates 
made  by  the  Secretary  of  the  Treasury  in  his  annual  report,  and 
a  statement  of  the  actual  operations  of  the  Treasury  Department 
since  July  last  imtil  January  12,  this  month,  differ  widely.  There 
is  already  a  deficit  of  $34,464,121.13,  or  $14,464,121.13  in  excess  of 
what  the  Secretary  estimated  in  his  annual  report  that  it  would 
be  for  the  entire  year. 

To  show  you  how  impossible  it  is  to  make  accurate  estimates  or  to 
pass  revenue  acts  which  will  produce  within  a  few  million  dollars 
of  the  estimates,  how  liable  legislative  bodies  are  to  mislead,  and 
how  only  you  can  be  safe  by  having  a  large  margin  with  such  a 
great  upheaval  of  the  business  interests  of  the  world,  let  me  read 
what  the  Secretary  himself  said  when  we  had  this  matter  under 
consideration  on  the  15th  day  of  August  last,  when  the  tariff  law 
had  been  passed  and  when  there  had  been  an  attempt  made  to  re- 
duce the  revenue  forty  or  fifty  million  dollars.  His  estimate  then 
was  that  the  revenue  under  the  tariff  law  up  to  July,  1895,  would 
be  $378,000,000,  and  that  our  expenditiires  during  that  time  would 
be  $363,000,000,  giving  an  estimated  surjjlus  dm-ing  that  time  of 
$15,000,000,  and  now,  by  his  own  statement,  made  three  months 
afterwards  and  taking  into  consideration  the  conditions  which  he 
could  not  anticipate  in  August  last,  he  says  there  vsdll  be  a  deficit 
of  $20,000,000.  The  statement  on  the  12th  of  this  month  shows 
that  it  is  already  $34,000,000.  The  letter  of  Secretary  Carlisle  to 
Senator  Harris,  dated  August  15,  1894,  is  as  follows: 

Treasury  Department,  Office  of  the  Secketabt, 

Washingtoti,  D.  C.  August  15,  ISOU. 
Dear  Sir  :  Your  letter,  advising  me  that  the  Hou.se  of  Representatives  had 
passed  and  sent  to  the  Senate  bills  jJiitting  sugar,  coal,  iron  ore,  and  barbed 
wire  on  the  free  list,  and  requesting  "  an  otticial  statement  from  you  [nie]  as  to 
the  effect  that  the  passage  of  these  bills,  or  either  of  them,  would  have  upon 
the  revenues  of  the  Government,"  is  received,  and  in  response  I  have  the 
honor  to  say  that,  according  to  the  most  careful  estimates  that  can  be  made, 
if  no  change  is  made  in  the  proposed  revenue  legislation  which  has  recently 
passed  through  Congress,  the  total  receipts  into  the  Treasury  during  the  cur- 
rent fiscal  year  will  be  as  follows: 

Estimated  revenues  for  fiscal  year  ending  June  SO,  1S05. 
From  duties  on  imports: 

Senate  VMU,  including  $43,000,000  on  sugar $179,000,000 

From  internal  taxes: 

\Vhisky $9.5,000,000 

Tobacco X\,m)Am 

Fermented  liquors 3:5,  ()(K),(K)0 

Income 1.5, 000.  OIJO 

Oleomargarine 1,8IK),(IOO 

Playing  cards - l,00(),()f)0 

Miscellaneous 200,000 

179,000,000 

From  sales  of  lands  and  other  miscellaneous  sources 30,000,000 

Total  estimated  revenue 378,000,000 

1758 


13 

The  estimated  receipts  for  the  present  year  from  the  proposed  tax  on  in- 
comes and  playing  cards  and  the  proposed  additional  tax  of  20  cents  per  gallon 
on  distilled  spirits  are,  it  will  be  observed,  much  less  than  is  stated  m  the 
various  tabulated  statements  which  have  heretofore  been  used  in  the  discus- 
sion of  these  subjects,  but  I  am  satisfied  the  amounts  here  given  are  approx- 
imately correct. 

The  proposed  income  tax  will  not  become  payable,  by  the  terms  of  the  bill 
recently  passed,  until  "on  or  before"  July  1, 1895,  which  is  the  close  of  the 
fiscal  year,  and  it  is  estimated  by  the  Commissioner  of  Internal  Revenue  that, 
by  reason  of  the  large  stock  on  hand,  the  receipts  from  the  tax  on  playing 
cards  will  not  amount  to  more  than  $1,000,000  during  this  year. 

The  estimated  increase  of  receipts  on  account  of  the  additional  tax  on  dis- 
tilled spii'its  during  the  present  year  has  already  been  prevented  to  a  great 
extent  by  the  withdrawal  of  large  quantities  of  goods  from  the  bonded  ware- 
houses and  the  payment  of  the  tax  thereon  at  90  cents  per  gallon,  and  this 
process  is  still  going  oh. 

The  total  expenditures  during  the  current  fiscal  year  will  be  as  follows: 
Civil  and  miscellaneous,  including  deficiency  in  postal  re  venues] ..  $90,000,000 

War,  including  rivers  and  harbors 56,000,000 

Navy,  including  new  vessels  and  armament 33,000,000 

Indians 10,000,000 

Pensions 143,-500,000 

Interest 30,500,000 

Total  estimated  expenditures 363,000,000 

Estimated  surplus  for  year 15,000.000 

The  duty  on  sugar  proposed  in  the  recent  bill  will,  according  to  importa- 
tions of  that  article  during  the  fiscal  year  1893,  yield  an  annual  revenue  of 
$43,478,958,  and  the  duties  on  the  other  articles  mentioned  in  your  communica- 
tion would  yield,  under  that  bUl,  about  $1,000,000:  that  is  to  say,  iron  ore, 
$370,920;  coal,  $436,149;  and  barbed  wire,  fencing  wire,  and  wire  rods,  of  iron 
or  steel,  when  imported  for  the  manufacture  of  barbed-wire  fencing,  about 
$300,000. 

It  will  be  seen,  therefore,  that  if  sugar  alone  is  placed  upon  the  free  list 
the  expenditures  during  the  present  fiscal  year  will  exceed  the  receipts  to 
the  amount  of  $28,478,058,  and  if  the  duties  are  removed  from  all  the  articles 
specified  in  your  letter  the  deficit  will  be  $39,478,058,  not  including  any  expend- 
iture on  account  of  the  sinking  fund,  or  the  payment  of  $2,363,000  of  Pacific 
Railroad  bonds  which  will  mature  during  this  fiscal  year. 

In  view  of  the  existing  and  prospective  requirements  of  the  public  service 
I  am  of  the  opinion  that  it  would  not  be  safe  to  place  all  the  articles  enumer- 
ated in  your  letter,  or  even  sugar  alone,  upon  the  free  list,  without  imposing 
taxation  upon  other  articles  or  subjects  sufficient  to  raise  an  annual  revenue 
of  about  $a),000,000. 

I  have  the  honor  to  be,  very  respectfully,  yours, 

J.  G.  CARLISLE,  Secretary. 

Hon.  ISHAM  G.  Harris,  , 

Acting  Chairman  Senate  Finance  Committee. 

In  the  last  annual  report  of  the  Secretary  of  the  Treasury,  dated 
December  3, 1894,  the  Secretary,  in  his  estimate  for  the  year  end- 
ing the  30th  day  of  June,  1895,  modifies  his  statement  of  August 
15.  His  estimate  of  revenues,  other  than  the  postal  service,  is  as 
follows: 

Fiscal  year  1895. 
The  revenues  of  the  Government  for  the  current  fiscal  year  are  thus  esti- 
mated upon  the  basis  of  existing  laws: 

From  customs $160,000,000 

From  internal  revenue 165,(XK),000 

From  miscellaneous  sources 15,000,000 

Total  estimated  revenues 340,000,000 

The  expenditures  for  the  same  period  are  estimated  as  follows: 

For  the  civil  establishment $91,2.50,000 

For  the  military  establishment 53,350, 0(X) 

For  the  naval  establishment 33,500.000 

For  the  Indian  service ]1,.5(K).000 

For  pensions 140,  .500, 000 

For  interest  on  the  public  debt 31,000,000 

Total  estimated  expenditures 360,000,000 

Or  a  deficit  of 20.000,000 

1758 


14 

This  shows,  Mr.  President,  a  difference  in  the  estimated  revenue 
on  the  loth  of  August  last  and  the  3d  day  of  December  of  $38,- 
000,000  decrease.  The  expenditures  were  estimated  in  August  last 
at  $363,000,000,  and  on  December  3  at  $360,000,000.  This,  of 
course,  does  not  include  the  postal  service  nor  the  permanent  ap- 
propriations. 

Mr.  COCKRELL.  That  is  the  statement  of  December  3  in  the 
Secretary's  report? 

Mr.  GORMAN.  The  statement  of  December  3  in  the  Secre- 
tary's report. 

Mr.  President,  I  say  in  that  condition  of  affairs  no  Senator,  no 
matter  what  his  party  affiliations  may  be,  can  afford  to  trifle  with 
the  condition  of  the  Treasury.  It  is  the  highest  duty,  as  expressed 
by  the  distinguished  Senator  from  Ohio  [Mr.  Sherman]  and  the 
Senator  from  Colorado  [Mr.  Teller^  ,  in  a  crisis  of  this  kind,  for 
which  no  party  is  entirely  responsible,  that  we  shall  maintain 
without  party  dl\dsion  the  honor  and  integrity  of  the  Government. 

Let  us  see  as  to  the  expenditures  for  1896,  to  which  the  Senator 
calls  my  attention.  The  Secretary  of  the  Treasury  says  in  his  re- 
port that  in  1896  under  the  operations  of  the  tariff  law,  based  upon 
the  same  calculations  on  which  he  made  his  estimate  for  1 895,  under 
the  same  method,  which  has  tm*ned  out  to  be  defective,  as  I  have 
shown,  he  will  have  a  bare  surplus  of  twenty-eight  million  eight 
hundred  and  fourteen  thousand  and  odd  dollars,  but  I  submit  that 
it  is  not  safe  to  follow  his  estimate  for  1896  and  hold  him  to  his 
figures.    He  ought  not  to  be  held  to  them. 

Mr.  President,  we  have  in  this  act,  for  which  the  Democratic 
party  is  responsible,  made  a  radical  departure  from  the  rule  of 
the  Government  and,  as  I  think,  from  all  the  provisions  of  the 
tariffs  as  heretofore  made.  We  have  departed  from  that  rule  which 
I  had  always  understood  was  fundamental  with  us,  and  that  is, 
that  the  greater  part  of  the  revenue  for  the  support  of  the  Gov- 
ernment should  come  from  customs  duties,  taxes  levied  upon  the 
wares  and  productions  of  other  peoples  who  ship  them  here  to  be 
sold,  and  that  whatever  deficit  there  was  after  levying  a  revenue 
duty  upon  importations  should  come  from  the  internal  revenue. 
Only  once,  from  1864  to  1868,  during  the  war  and  immediately 
following,  when  this  immense  debt  was  piled  up  against  us,  was 
that  rule  departed  from.  Then  we  collected  more  revenue  from 
internal  taxation  than  we  did  from  customs  duties. 

Now,  so  zealous  have  we  been  to  redeem  our  party's  pledges, 
that  we  have  come  back  to  that  method,  and  in  this  law  we 
have  provided  for  more  tax  from  internal  sources  than  we  receive 
from  customs,  and  it  has  been  for  me  a  matter  of  amazement  that 
the  advanced  tariff  reformers  should  not  be  satisfied  with  the  fact 
that  under  this  law  we  are  getting  more  from  internal-revenue 
taxation  than  we  are  from  the  tariff.  We  did  not  receive  enough 
duty  upon  the  foreign  goods  which  were  brought  into  this  coimtry 
in  1894  to  pay  the  pensions  which  we  are  compelled  to  pay  every 
year.  In  other  words,  the  ordinary  expenses  of  the  Government 
are  now  paid  exclusively  from  internal  taxes,  and  we  did  not 
last  year  collect  by  $10,000,000  enough  from  customs  duties 
to  pay  the  $140,000,000  of  pensions  which  we  were  required  to 
pay. 

Mr.  President,  I  have  shown  that  since  1892,  under  the  opera- 

1758 


15 

tions  of  the  McKinley  law  and  under  the  present  law,  we  have 
not  collected  sufficient  revenue  to  meet  all  the  demands  upon  the 
Treasury.  We  shall  not  collect  until  1896  a  sufficient  amount 
under  the  present  law,  and  unless  there  is  a  gi'eat  revival  in  busi- 
ness affairs  it  is  possible  that  the  deficiency  will  extend  until  1897. 
If  business  revives  and  resumes  the  normal  condition,  then,  sir, 
under  the  recent  act  there  will  not  only  be  enough  revenue,  but  a 
surplus.  I  speak,  however,  of  present  conditions  which  must  be 
met.  How  can  they  be  met?  Can  we  reduce  the  expenditures? 
That  question  has  been  answered  heretofore.  I  answer,  no,  you 
can  not  reduce  your  expenditures  materially. 

In  1893  the  great  pension  budget,  for  which  we  are  not  responsi- 
ble, amounted  to  $160,000,000.  It  is  now  said  to  have  then  reached 
the  highest  point,  and  it  is  now  down  to  $141,000,000.  No  man  in 
either  House  of  Congress,  no  man  on  either  side  of  this  Chamber 
or  the  other,  will  say  that  we  can  reduce  that  pension  list.  It 
will  only  decrease  as  the  old  soldiers  die  and  pass  away.  Its  reduc- 
tion will  be  gradual,  but  it  may  be  counted  on  as  $135,000,000  per 
annum  for  the  next  ten  years.  You  can  not  reduce,  says  our 
Democratic  Secretary  of  the  Treasury,  any  of  the  ordinary  ex- 
penses of  the  Government  to  amount  to  anything.  Look  at  his 
estimates  of  expenditiu-es.  These  he  can  measure  accurately. 
With  your  postal  service  extending,  and  not  being  self-support- 
ing; with  your  Navy,  which  is  created,  and  which  is  the  pride  of 
the  nation,  and  can  not  be  diminished;  with  your  rivers  and  har- 
bors, which  must  be  completed,  where  contracts  are  made;  with 
the  ordinary  expenses  of  the  Departments,  which  can  not  be  re- 
duced much,  not  more  than  ten  or  twenty  millions,  but  which 
will  rather  grow  than  diminish,  there  can  be  no  great  reduction 
of  the  expenditures  of  the  Government.  Indeed,  the  Secretary  of 
the  Treasury  puts  his  expenditures  for  the  year  ending  1896  some 
millions  higher  than  the  expenditures  of  1895. 

The  junior  Senator  from  Pennsylvania  [Mr.  Quay]  has  been 
good  enough  to  say  that  the  Democratic  party  has  been  rebuked 
by  the  people,  that  it  has  been  dismissed  from  power,  and  has  been 
commanded  by  an  overwhelming  voice  to  do  no  further  mischief. 

Mr.  President,  the  Democratic  party  was  defeated  at  the  polls 
in  November  last.  I  admit  that.  The  Senator  from  Colorado 
[Mr.  Teller],  another  distinguished  Republican,  stated  the  case 
more  fairly  when  he  said  on  Saturday  last  that  by  an  overwhelm- 
ing majority  the  Republican  party  had  been  swept  into  power. 
This  is  true,  but  it  is  not  because  the  people  had  more  confidence 
in  your  sagacity  or  your  ability  than  in  the  Democratic  party, 
but  in  the  hour  of  their  great  distress  they  would  have  removed 
from  power  any  party  which  had  control  of  the  Government. 
You  will  come  into  power  after  the  4th  of  March  next  under  bet- 
ter conditions  than  we  did  on  the  4th  of  March,  1893.  We  have 
removed  from  your  path  many  of  the  obstructions  you  otherwise 
would  have  had.  As  compared  with  our  work  you  will  have 
comparatively  little  to  do.  You  will  come  with  a  majority  else- 
where as  great  as  we  had;  you  wiU  have  in  this  body  a  majority 
equal  to,  if  not  greater,  than  that  we  had,  for  we  were  only  sus- 
pended by  the  thinnest  kind  of  a  thread.  The  responsibility  will 
then  be  on  you. 

I  say  to  the  Senator  from  Pennsylvania  that  when  bis  party  is 

1758 


16 

met  with  the  questions  which  confront  us  now,  I  for  one  will 
treat  him  and  his  friends  in  a  different  spirit  from  that  which  he 
has  manifested  toward  us.  I  will  say  now  that,  without  waiting 
for  you  to  ask  for  help  on  any  question  which  affects  the  finances 
of  the  Government,  on  any  proposition  which  is  necessary  to  pre- 
vent the  embarrassment  of  the  Treasury,  and  on  any  proposition 
which  is  necessary  to  reform  the  currency  and  which  will  give  us 
sound  and  good  money,  I  will  help  you,  as  I  think  you  ought  to 
volunteer  to  help  us  now. 

Mr.  QUAY.     Mr.  President 

The  PRESIDING  OFFICER.  Does  the  Senator  from  Maryland 
yield  to  the  Senator  from  Pennsylvania? 

Mr.  GORIVIAN.    Certainly. 

Mr.  QUAY.  I  have  no  hesitancy  in  saying  that  I  am  willing  to 
cooperate  with  the  Senator  from  Maryland  and  with  the  friends  of 
the  Administration  in  supplying  additional  revenue  and  in  re- 
vising the  currency.  It  was  my  privilege  to  act  with  the  Admin- 
istration and  the  Senator  from  Maryland  in  the  contest  over  the 
repeal  of  the  purchasing  clause  of  the  Shei-man  law,  and  I  will 
pursue  the  same  course  again.  Nothing  in  my  remarks  in  the 
Senate  the  other  day  can  be  construed  into  any  general  opposition 
to  a  conservative  policy  upon  the  other  side  of  the  Chamber. 

;Mr.  GORMAN.  I  am  very  glad  to  hear  the  statement  of  the 
Senator. 

Mr.  ALDRICH.  Will  the  Senator  allow  me  to  interrupt  him  a 
moment? 

Mr.  GORMAN.     Certainly. 

Mr.  ALDRICH.  The  Senator  says  that  the  responsibility  of 
legislation  will  be  upon  this  side  of  the  Chamber  after  the  4th  of 
March  next.  Does  he  mean  to  have  it  inferred  from  that  that  the 
Executive  will  be  with  us  after  the  4th  of  March?     [Laughter.] 

Mr.  GORMAN.  Mr.  President,  I  distinctly  stated  that  the 
party  of  the  distinguished  Senator  from  Rhode  Island  would  be 
in  the  majority  in  both  Houses  of  Congress;  that  is,  the  legisla- 
tive department  of  the  Government,  and  the  Republican  party 
will  have  the  power  to  frame  any  measure  that  they  may  think 
wise  and  judicious.  I  have  no  doubt  whatever  that  the  President 
of  the  United  States  will  gladly  cooperate  with  that  majority  and 
aid  in  the  passage  of  any  measure  which  looks  to  the  advancement 
of  the  prosperity  of  this  country.  I  have  never  known  a  Presi- 
dent of  the  United  States  who  would  not  pursue  that  course,  no 
matter  what  party  was  in  power  in  both  branches  of  Congress. 

Mr.  HALE.     Mr.  President^— 

The  PRESIDING  OFFICER.  Does  the  Senator  from  Maryland 
yield  to  the  Senator  from  Maine? 

Mr.  GORMAN.    With  great  pleasure. 

Mr.  HALE.  Only  for  a  moment.  The  Senator  has  declared 
that  after  the  4th  of  March  next  the  responsibility  will  be  with 
this  side  of  the  Chamber,  and  he  has  promised  his  aid  in  anything 
which  shall  be  attempted  by  this  side  to  relieve  the  country  from 
its  embarrassments  and  to  protect  and  reenforce  the  Treasury. 
Does  he  not  know  that  the  administration  of  the  Government, 
the  conduct  of  the  Treasury  Department,  the  management  of  its 
revenues,  and  the  collection  of  its  revenues  will  be  for  two  years 
after  the  4th  of  March  as  much  with  his  Administration  as  it  ifl 
now? 

1758 


17 

Further,  when  the  Senator  says  that  the  President  will  patriot- 
ically join  this  side  of  the  Chamber  in  any  measure  that  will  re- 
lieve the  situation,  I  ask  the  Senator  does  he  believe,  if  the  re- 
sponsibility in  both  branches  falls  upon  the  Reptiblicans  for  the 
next  two  years  and  a  Republican  meastire  shall  be  submitted  on 
Repriblican  lines,  which  shall  raise  revenue  enough  to  free  the 
Treasury  from  its  embarrassments  and,  instead  of  causing  a  defi- 
cit, will  overflow  its  coffers,  that  the  President  mil  join  with  the 
Republicans  in  helping  to  pass  such  a  measure? 

We,  Mr.  President,  have  our  ideas  of  the  present  situation;  it  is 
becaiise  the  revenues  are  not  sufficient  under  the  present  laws  to 
run  the  Government,  and  the  Senator  has  stated  that  plainly.  We 
also  have  our  ideas — and  they  are  a  part  of  the  Republican  policy 
of  protection — how  money  enough  can  be  raised,  and  when  the 
full  power  is  given  us  we  expect  to  furnish  that  money. 

Now,  I  ask  again  if  the  Senator  is  authorized  to  state  from  the 
President  that  if  the  Republicans  have  the  power  in  the  next  Con- 
gress and  shall  frame  a  bill  upon  Republican  lines  so  that  ample 
revenue  will  be  afforded,  the  President  will  aid  us  in  making  it  a 
law? 

Mr.  GORMAN.  The  Senator  from  Maine  simply  did  not  catch 
the  point  of  my  remarks.  I  stated  to  him  and  to  the  Senate  and 
to  the  country  frankly  that  here  is  a  condition  which  confronts 
the  American  people  more  appalling  than  any  which  has  occurred 
in  our  history.  I  have  been  generous  enough  with  you  to  say  that 
the  acts  of  the  Republican  party  when  they  were  in  the  majority 
were  not  alone  responsible  for  the  condition,  because  I  believe  that 
to  be  the  truth.  I  believe  the  condition  which  confronts  us  now 
we  inherited  in  part  from  you,  but  the  great,  the  underlying 
cause  is  beyond  party,  and  now  is  the  time  for  patriotic  action. 

I  appeal  to  you  now  to  do  your  duty  as  patriots,  not  as  Repub- 
licans. I  have  told  you  frankly  that  when  you  come  into  power 
in  both  branches  of  Congress,  if  you  will  in  the  same  spirit  sink 
mere  partisanship  and  treat  the  question  as  one  of  national  honor 
and  national  interest,  then  I  will  stand  with  you.  Whilst  I  have 
no  right  to  speak  for  any  executive  officer,  I  think  I  can  say,  with- 
out the  slightest  hesitation,  that  there  is  not  a  man  in  the  Govern- 
ment, from  the  President  down,  who  vrill  not  help  you  in  any  such 
patriotic  effort,  and  not  in  a  purely  partisan  one,  which  I  am  sure 
the  Senator  does  not  intend  to  make. 

Mr.  ALDRICH.    Will  the  Senator  permit  me  a  moment? 

Mr.  GORMAN.     Certainly. 

Mr.  ALDRICH.  So  far  in  his  speech  the  Senator  has  only 
called  attention  to  the  fact  that  we  have  a  deficient  revenue,  and 
he  asks  us  to  help  him  in  this  emergency.  I  hope  he  will  state 
before  he  gets  through  with  his  speech  what  remedy  he  proposes 
to  secure  a  sufficient  revenue. 

Mr.  GORMAN.  The  first  thing  to  do,  Mr.  President,  is  to  pass 
the  pending  appropriation  bill,  which  makes  provision  for  the  en- 
forcement of  a  law  which  will  bring  from  fifteen  to  thirty  mil- 
lion dollars  per  annum  into  the  Treasury.  I  prefer  to  deal  with 
one  thing  at  a  time  in  applying  remedies,  and  that  can  be  the  only 
question  in  the  consideration  of  this  bill. 

But  now  let  us  go  back  and  see  what  the  people  will  say,  who 
will  now  begin  to  have  time  to  inquire  why  this  condition  of  af- 

1758 2 


18 


fairs  exists  and  who  is  responsible  for  it.  They  will  ask  what  is 
the  condition  of  the  Treasury  now,  and  what  was  it  when  the 
other  side  had  control  of  every  branch  of  the  Government?  The 
answer  must  be  this — and  it  is  a  fearful  answer:  That  in  1891, 
1892,  1893,  and  for  the  fiscal  year  1894,  with  two  years  of  abso- 
lute control  by  the  other  side  and  one  year  and  six  months  under 
a  Democratic  Administration,  the  revenues  of  the  Gover:iment 
under  the  McKinley  law  amounted  to  how  much  in  those  four 
years?  One  billion  seven  hundred  and  eighteen  million  nine  hun- 
dred and  thirty-one  thousand  five  hundred  and  fifty -three  dollars 
and  forty-eight  cents;  the  expenditures,  including  the  postal  serv- 
ice and  the  sinking  fund,  amounted  to  $1,838,150,767.20,  showing 
an  excess  of  expenditures  from  1891  to  1894  over  receipts  amount- 
ing to  $119,219,213.72. 

Mr.  President,  that  is  not  all.  When  we  came  into  power  the 
appropriations  which  had  been  made,  and  of  course  not  met — be- 
cause it  was  impossible  to  meet  them  on  account  of  a  deficient 
revenue — the  appropriations  in  1891,  1892,  and  1893,  when  the  Re- 
publican party  had  the  entire  control  of  the  Government,  exceeded 
your  whole  revenue  by  $362,000,000. 

What  is  the  condition  to-day?  The  appropriations  we  made 
from  1891  until  the  1st  of  Julv  last  exceeded  the  entire  revenues 
of  the  Government  $296,868,547.41. 


Fiscal  year  ending  June 
30— 

Revenues,  in- 
cluding postal. 

Expenditures, 
including 
postal  and 

sinking  fund. 

Appropriations, 

including 

postal  and 

siuking  fund. 

1891 

$458,544,233.03 
425,868,ai0.23 
4fil,nt),.5(31.94 
372,802,498.29 

$475,711,802.44 
453,527,986.54 

442,827,34«.07 

$463,398,510.79 

1892  .... 

525, 018, 672.  .55 

1893 

507, 878, 5.58.  Si 

1894 .  .. 

519,504,359.21 

Total  for  four  years. 

1,718,931,553.48 

1,838,150,767.20 

2,015,800,100.89 

Excess  of  expenditures  over  revenue  for  four  years -  $119,219,213.72 

Appropriations  in  excess  of  revenue  for  four  years 29<),  868,  .547. 41 

Is  it  the  fault  alone  of  Congress  that  these  appropriations  are 
made?  No.  The  power  to  economize  is  in  the  executive  depart- 
ment to  as  great,  if  not  greater,  an  extent  than  it  is  in  Congress. 
What  have  they  said  to  Congress?  "We  want  more  money  than 
you  have  given  us." 

The  Senator  from  Maine  [Mr.  Hale]  ,  the  Senator  from  Iowa 
[Mr.  Allison]  ,  the  Senator  from  Missouri  [Mr.  Cockrell]  ,  and 
others  of  us  have  stood  here  for  years  combating  the  Departments, 
and  not  making  the  appropriations  they  have  demanded.  We  on 
this  side  of  the  Chamber  aided  you  to  restrain  your  own  party 
when  you  were  in  power,  and  you  have  aided  us  to  restrain  ours. 
Here  are  the  estimates  of  the  appropriations  for  1892,  1893,  1894, 
and  1895.  I  shall  not  tire  the  Senate  to  read  the  whole  of  the 
table.  In  1892  the  estimates  were  $532,032,169.40,  and  the  appro- 
priations were  $525,018,672.55— $7,013,496.85  less  than  the  Depart- 
ments wanted.  That  was  during  Mr.  Harrison's  Administration. 
In  1893  the  estimates  were  $509,449,257.26,  and  the  appropriations 
$507,600,188.71,  the  estimates  exceeding  the  appropriations  by 
$1,849,068.55.  There  was  no  estimate  for  rivers  and  harbors,  for 
1758 


19 

which  $21,154,218  was  appropriated.  In  1894,  under  our  Admin- 
istration, the  estimates  were  $538,611,3o5.33,  and  the  appropria- 
tions $519,504,359.21,  the  appropriations  being  $19,106,976.12  less 
than  the  estimates .  For  1 895 — that  is ,  the  current  year  —$520 ,  662 ,  - 
840.71  was  estimated  for. 

Mr.  COCKRELL.     Estimates  to  that  amount  are  already  here. 

Mr.  GrORMAN.  Yes;  the  appropriations  alreadymade  or  about 
to  be  made  aggregate  $492,230,685.03,  being  $28,432,155.68  less 
than  the  estimate. 

There  the  figures  stand.  What  is  to  be  done?  This  Govern- 
ment can  not  repudiate.  It  has  the  ability  to  pay,  and  it  wiU  pay. 
It  has  assumed  obligations  in  the  payment  of  which  there  is  not  a 
citizen  in  the  land  who  would  have  a  moment's  default.  It  lias 
agreed  to  complete  great  public  works  embraced  in  the  $298,000,- 

000  not  yet  expended,  but  which  must  be  expended.  It  is  con- 
structing yet  a  Navy  for  which  it  must  pay.  It  has  contracted 
to  pay  the  pensions,  and  no  man  would  stay  it.    It  has  agreed,  and 

1  am  not  going  into  the  question  of  the  propriety  of  the  act  in  the 
past,  to  maintain  its  currency  on  a  gold  basis.  It  intends  to  keep 
that  currency  as  sound  as  any  in  the  world,  and  for  one,  no  mat- 
ter what  it  may  cost,  so  long  as  that  obligation  rests  as  it  is  upon 
the  Secretary  of  the  Treasury,  I  say  he  and  the  President  of  the 
United  States  were  right  in  their  acts  and  declarations  that  they 
would  continue  to  issue  bonds  and,  keep  the  credit  of  the  Govern- 
ment intact;  and  they  have  continued  to  do  it. 

Now,  whether  the  policy  inaugurated  by  the  law  is  right  is  a 
question  into  which  I  shall  not  at  this  time  enter,  but  there  is  one 
fact  that  stares  us  squarely  in  the  face.  It  is  a  consideration  upon 
which  I  acted  when  I  supported  amendments  to  the  revenue  bill 
to  increase  the  revenue — that  you  could  not  reduce  taxes  as  was 
proposed  and  meet  the  expenditures  of  the  Government  without 
issuing  bonds.  I  wished  to  avoid  the  issuance  of  bonds,  as  I  do 
now.  But  $100,000,000  of  bonds  have  been  issued,  for  which  the 
Treasury  has  received  about  $116,000,000. 

It  is  true  that  these  bonds  were  sold,  as  is  stated  by  the  Secre- 
tary, to  replenish  his  gold  reserve.  They  were  sold  for  gold;  but 
within  a  short  time  after  the  sale  of  the  bonds  the  holders  of  Treas- 
ury notes  and  United  States  notes  presented  them  to  the  extent  of 
over  one  hundred  millions  and  demanded  gold,  as  they  had  a  right  to 
do  under  the  law;  and  these  United  States  notes  and  Treasury 
notes  have,  in  turn,  been  used  for  the  purpose  of  paying  the  cur- 
rent expenses  of  the  Government.  So  that  in  fact  the  greater 
part  of  the  proceeds  from  the  sale  of  bonds  has  been  applied  to  pay 
the  current  expenses  of  the  Government. 

Mr.  President,  i  am  not  unmindful  of  the  fact  that  when  we 
considered  the  revenue  bill  in  this  body,  myself  and  many  other 
Senators,  who  insisted  upon  increasing  the  levy  to  be  made,  were 
misunderstood  and  grossly  misrepresented  by  a  portion  of  the  press 
of  the  country.  Even  brother  Senators  did  not  hesitate  to  declare 
that  there  was  no  necessity  for  the  increase  which  I  advocated.  It  is 
no  wonder,  then,  that  our  position  was  misunderstood  by  the  peo- 
ple and  that  many  of  them  believed  that  we  were  advocating 
simply  increased  taxation  when  there  was  no  Treasury  necessity 
for  the  increase.  I  for  one  knew  that  the  time  would  come — 
hardly  so  speedily,  however — when  the  people  of  the  country, 
1758 


20 

the  great  mass  of  intelligent  men  who  love  justice  and  want  fair 
play,  would  do  full  justice  to  us  when  they  realized  the  fact  that 
the  course  we  advocated  was  a  justifiable  one,  and  made  neces- 
sary by  the  condition  of  the  Treasirry,  The  people  want  economy 
in  expenditures;  but  they  are  content  to  have  sufficient  taxes  im- 
posed to  pay  the  current  expenses.  They  will  not  tolerate  a  policy 
which  will  bring  the  Government  in  debt  and  which  can  only  be 
met  by  the  issuance  of  bonds  for  the  ordinary  expenses. 

The  distinguished  Senator  from  Indiana  [Mr.  Voorhees]  ,  chair- 
man of  the  Counnittee  on  Finance,  and  his  colleagues  on  that 
committee  are  entitled  to  great  credit  for  standing  as  they  did  and 
as  was  their  duty,  and  insisting  that  the  bill  as  it  came  from  the 
House  should  be  amended  so  as  to  make  it  a  revenue  measxu'e, 
which  would  meet  the  wants  of  the  Treasury.  I  do  not  refer  to 
the  little  details  of  the  bill;  I  care  nothing  about  them.  Nor  do  I 
care  for  the  miserable  attempts  to  dwarf  the  importance  of  that 
great  measure,  or  for  the  attempts  to  fix  upon  certain  individuals 
the  responsibility  for  any  or  all  the  minor  defects  in  the  act. 

The  country  will  give  the  great  statesmen  on  the  Committee  on 
Finance,  who  in  the  midst  of  excitement  and  abiise  insisted  upon 
a  measure  to  create  revenue  and  not  to  provide  a  deficiency,  credit 
for  their  action.  For  one,  I  willingly  take  my  share  of  the  re- 
sponsibility for  whatever  minor  mistakes  may  have  been  made. 
For  the  vast  improvement  made  in  the  bill  after  it  reached  the 
Senate  the  members  of  the  Committee  on  Finance  are  entitled  to 
the  credit.  That  the  measure  has  not  and  will  not  in  the  next 
year  produce  enotigh  revenue  is,  as  I  have  shown,  no  fault  of 
theirs,  but  comes  from  causes  not  foreseen  and  impossible  to  be 
measured  at  the  time  of  the  passage  of  the  act  in  August  last.  It 
is  another  pointed  reminder  that  in  legislative  matters  we  are  not 
infallible. 

The  Senator  from  Rhode  Island  [Mr.  Aldrich]  asks  me  what 
remedy  I  i)ropose.  We  can  not  do  anything,  Mr.  President,  in 
this  body  at  this  time,  except  to  pass  this  deficiency  bill  giving  the 
Secretary  of  the  Treasury  a  sufficient  amount  of  money  to  enforce 
the  provisions  of  the  revenue  act  and  bring  into  the  Treasury  all 
the  money  that  that  act  will  produce. 

Mr.  ALDRICH.  Why  not  pass  a  simple  measure  to  increase 
the  revenue? 

Mr.  GORMAN.  I  was  about  to  say  that  we  in  this  body  have 
no  power  to  increase  the  revenue. 

Mr.  ALDRICH.  But  we  have  lying  on  the  table  several  biUs 
coming  from  the  House  of  Representatives  which  can  be  amended. 

Mr.  GORMAN.    Oh,  they  are  bills  to  reduce  the  revenue. 

Mr.  ALDRICH.  As  the  bills  stand  now  they  are  to  reduce  the 
revenue,  but  the  Senate  can  change  the  nature  of  them,  I  take  it, 
so  as  to  increase  the  revenue. 

Mr.  GRAY  and  Mr.  VEST.  Will  the  Senator  from  Rhode  Is- 
land help  lis  to  take  up  those  bills? 

Mr.  ALDRICH.  I  certainly  will  if  the  Senator  and  those  on  the 
other  side  will  agree  as  to  some  method  of  increasing  revenue. 

Mr.  VEST.  If  we  will  agree  to  do  that  which  will  kill  the  biUs 
the  Senator  will  help  us  to  take  them  up. 

Mr.  GORMAN.  Mr.  President,  I  answer  the  Senator  frankly 
and  tell  him  that  a  measui-e  to  increase  taxation  can  not  and 

1758 


21 

ought  not  to  originate  here,  and  the  Senator  knows  as  well  as  I 
do  that  to  pass  any  measure  to  give  relief  to  the  Treasury  in  the 
expiring  hours  of  this  Congress  could  only  be  such  a  measure  as 
would  not  reopen  the  whole  tariff  discussion.  I  do  not  misstate 
the  attitude  of  the  party,  of  which  the  Senator  is  so  distftiguished 
a  member,  when  I  say  that  it  has  declared  against  reopening  and 
agitating  the  whole  tax  question.  The  business  people  of  the 
country  want  rest  and  an  opportunity  to  build  up  their  affairs, 
and  therefore  nothing  can  be  done  by  the  Senate  at  this  time. 
We  must  wait  and  see  if  such  a  simple  proposition  will  come  to 
lis  as  will  relieve  the  emergency  without  reopening  the  whole 
tariff  discussion. 

Mr.  President,  can  we  do  anything  to  relieve  the  condition? 
There  is  an  impression  widespread,  extending  beyond  this  Hall, 
throughout  the  country,  that  the  modification  of  or  radical  change 
in  our  currency  laws  would  give  great  relief  and  would  do  much 
to  start  the  wheels  of  industry,  to  give  the  railroads  increased 
trade  and  bring  increased  prosperity  to  every  avocation,  and  that 
some  morning  after  such  an  act  should  be  passed,  with  or  without 
reason,  as  it  always  occurs,  you  would  find  upon  the  faces  of  the  in- 
dustrial masses  a  bright  smile,  and  that  we  would  at  once  move 
on  to  better  conditions. 

Mr.  President,  I  am  ready  to  aid  in  the  passage  of  any  act  which 
will  give  such  relief,  but  no  human  being,  so  far  as  I  know,  has 
yet  devised  such  a  measure  as  will  meet  the  approval  of  both 
Houses  of  Congress. 

Mr.  President,  we  all  understand  how  difficult  it  is  to  frame  a 
wise  measure  affecting  the  currency;  such  a  measure  as  would 
give  the  proper  elasticity  and  yet  secure  a  sound  currency  in  such 
form  that  the  notes  issued  shall  be  acceptable  in  every  part  of  the 
country  without  question,  as  is  the  case  now,  and  at  the  same  time 
relieve  the  Treasury  of  the  onerous  duty  of  furnishing  the  coin  for 
the  redemption  of  the  notes.  With  the  wide,  with  the  radical  dif- 
ferences of  opinion  between  our  friends  from  the  Western,  South- 
ern, and  Eastern  sections  of  the  country  upon  such  measures,  it  is 
impossible,  sir,  in  my  judgment,  that  such  an  act  can  be  passed 
either  in  this  Congress  or  in  the  next,  unless  it  has  support  from 
both  parties.  The  Democratic  party  is  not  responsible  for  the  cur- 
rency laws  as  they  now  stand.  As  I  have  said,  they  will  probably 
not  be  modified;  they  ought  not  to  be  modified  in  a  crisis  like  tliis 
solely  by  party  action.  It  is  a  time  when  those  of  us  on  both  sides 
should  arise  above  party  and  give  our  best  thought  and  patriotic 
action  to  the  country. 

Mr.  President,  I  do  not  know  whether  between  now  and  the  4th 
day  of  March  any  well-devised  plan  which  would  have  a  beneficial 
effect  will  be  formulated.  I  hope  there  may  be.  I  trust  that,  if 
it  can  be  done,  when  the  measure  comes  it  will  have  the  earnest 
support  of  the  distinguished  Senators  on  the  other  side  of  the 
Chamber.  It  would  be  good  politics  for  you,  coming  as  you  do 
with  this  overwhelming  majority  in  another  place  and  a  safe  ma- 
jority here,  to  unite  with  us  who  now  have  the  responsibility,  biit 
have  not  the  power  of  the  votes  on  this  side,  and  eliminate  that 
question  so  far  as  you  can  from  the  politics  of  the  country. 

[Senator  Hill,  of  New  York,  having  at  this  point  taken  the 
fioor  in  reply.  Senator  Gorman  resumed  the  floor  and  spoke  as 
follows:] 

Mr.  G-ORMAN.    Mr.  President,  it  is  far  from  my  intention  or 

1758 


22 

desire  to  get  into  a  controversy  with  the  Senator  from  New  York, 
or  any  other  Senator  who  claims  to  be  a  Democrat.  What  I  had 
to  say  to-day  I  think  was  legitimate,  in  view  of  the  utterances  of 
the  distinguished  Senator  from  New  York  and  others  in  their  at- 
titude ui)on  the  item  of  the  appropriation  bill  under  consideration. 

The  Senator  from  New  York  seems  to  understand  that  my  ob- 
ject was  personal  vindication.  Mr.  President,  I  have  never  thought 
for  a  single  moment  in  my  public  life  that  any  act  of  mine  re- 
quired vindication.  I  have  had  but  one  rule,  which  is,  when 
after  patient  and  careful  investigation  I  had  determined  in  my 
own  mind  whether  a  proposition  was  right,  to  support  that  proposi- 
tion no  matter  how  great  the  storm,  and  let  vindication  come 
when  truth  should  permeate  the  minds  of  my  fellow-citizens. 
Disagreeable  as  slander  is  when  incurred  and  insinuated  by  those 
with  whom  you  cooperate,  I  have  uttered  no  word  of  complaint 
and  never  thought  a  word  of  explanation  was  necessary. 

There  is  another  rule  that  I  have  followed,  to  which  there  has 
been  no  exception.  When  I  have  met  with  my  party  fellows  in 
council,  recognizing  their  better  judgment  after  discussing  ques- 
tions of  public  interest,  I  have  subordinated  my  own  individual 
views  to  that  of  the  majority  of  ray  fellows,  unless  a  principle  is 
involved.  Hence  it  is,  that  I  stood  by  every  provision  in  the  tai'iff 
bill,  many  of  which  were  as  distasteful  to  me  as  they  could  have 
been  to  the  Senator  from  New  York. 

The  Senator  says  I  make  a  piteous  appeal  to  those  upon  the  other 
side  of  the  Chamber.  I  have  never  made  a  piteous  appeal  to  any 
living  man.  I  have  never  made  a  piteous  appeal  to  my  party  fel- 
lows here  or  elsewhere,  and  I  think  I  have  too  much  manhood  and 
courage  to  do  it.  I  have  declared  in  the  face  of  political  power, 
great  as  it  is,  that  I  would  leave  public  life  before  being  swayed 
by  power. 

But  in  matters  of  public  concern,  I  have  said  when  I  was  in  the 
minority,  as  I  say  now  when  we  have  a  doubtful  majority,  that  a 
sound  currency  bill,  as  I  imderstand  it  (as  the  people  in  the  part 
of  the  country  from  which  I  come  understand  the  meaning  of  the 
word  "  sound"),  can  not  be  passed  in  this  body  by  the  votes  alone 
of  the  other  side  of  the  Chamber  or  by  the  votes  alone  of  this  side 
of  the  Chamber. 

I  recognize  another  thing.  When  the  distinguished  Senator 
from  New  York,  for  whom  I  have  a  high  personal  regard,  set  up 
the  standard  that  unless  he  could  have  absolutely  his  own  judg- 
ment followed  upon  the  income-tax  feature  of  a  great  tariff  bill 
containing  thousands  of  items,  he.  the  man  who  had  been  looked  to 
as  the  foremost  Democratic  organizer  m  this  country,  would  leave 
his  party  upon  that  question  and  join  the  other  side  and  keep  the 
McKinley  Act  in  force,  I  submit,  Mr.  President,  on  a  matter 
where  party  is  not  at  stake,  where  the  credit  and  honor  of  the 
country  are  at  stake,  where  the  question  of  sound  money,  which 
means  prosperity  to  every  industry  in  the  land  is  at  stake,  I  have 
a  right  to  say  to  our  friends  on  the  other  side  of  the  Chamber, 
"  You  are  hesitating  too  much;  you  ought  not  to  wait  to  be  asked 
to  help  us  in  this  emergency;  you  ought  to  volunteer  your  best 
judgments  and  your  votes  in  the  interest  of  a  distressed  people." 
That  I  did,  and  I  coupled  it  with  the  further  statement  I  have 
made  when  I  have  been  in  the  minority  (and  there  is  not  a  Senator 
1758 


23 

on  tne  other  side  of  the  Chamber  who  has  served  with  me  who 
does  not  know  it  to  be  a  fact)  that  when  you  come  in,  if  there  is 
further  legislation  to  be  had,  I  will  do  all  that  I  suggest  you  shall 
do  now.  I  will  not  hesitate,  but  I  will  wait  on  you  and  tender 
you  my  services.    Yet  that  is  called  a  "piteous  appeal.'" 

Mr.  President,  I  shall  not  follow  the  Senator  from  New  York 
in  all  his  criticism  about  the  little  details  of  the  tariff  act.  I  pass 
that  over.  It  has  gone.  I  respect  the  judgment  of  every  Senator 
about  the  details  of  a  tariff  act.  I  have  no  quarrel  with  any  Dem- 
ocrat in  the  United  States  because  he  advocates  this  or  that  rate 
of  duty  upon  chemicals,  or  iron  ore,  or  sugar,  or  any  other  partic- 
ular item  of  the  tariff.  As  long  as  the  country  stands  and  we 
have  free  government,  so  long  will  there  be  as  many  divisions  of 
opinion  upon  the  various  items  as  there  are  States,  localities,  and 
interests. 

Mr.  President,  the  Senator  reminds  me  that  on  the  23d  day  of 
May  last  in  what  I  had  to  say  upon  the  tariff  biU,  I  predicted 
a  bright  future  for  the  Democratic  party.  I  did,  sir.  I  com- 
mended that  bill.  I  spoke  from  this  place  with  the  firm  convic- 
tion that  every  Democrat  in  this  body  and  all  who  had  been  con- 
sulted about  the  measure  had  agreed  that  in  the  interest  of  the 
country,  for  the  purpose  of  producing  a  revenue  to  support  the 
Grovemment,  we  had  come  together  as  one  man  to  the  support  of 
that  bill.  That  was  my  belief;  and  if  it  had  turned  out,  as  unfor- 
tunately it  did  not,  that  the  individual  membership  of  oiir  party, 
from  its  head  to  the  man  in  the  lowest  rank  on  the  Pacific,  could 
have  stood  conscientiously  in  the  Democratic  party  and  indorsed 
that  measure  we  would  have  had  greater  success. 

But,  Mr.  President,  the  unforeseen  always  happens.  I  did  not 
know  then  that  we  were  to  have  this  unfortunate  division.  I  had 
no  idea  then  that  the  Senator  from  New  York  intended  tt>  leave  us 
and  vote  with  the  gentlemen  on  the  other  side  for  the  defeat  of 
the  bill.  I  knew  he  was  opposed  to  the  income  tax,  but  I  did  not 
know  then  that  he  would  go  to  the  extent  of  voting  against  the 
bill. 

Mr.  President,  no  man  could  have  foreseen  the  diflSculties  which 
were  encountered  by  us.  Resolutions,  says  the  Senator,  were 
passed  in  Maryland  and  other  States  which  did  not  indorse  the 
bill.  In  every  State  of  the  Union  resolutions  were  passed  con- 
demning the  Senate  bill,  condemning  the  final  action  of  our  party, 
everyone  complaining  that  we  had  not  gone  far  enough  in  the  re- 
duction. That  was  the  issue.  And  with  it  there  was  this  terrible 
depression  that  kept  coming  on  and  on  and  on,  until  there  was 
paralysis  in  every  industry.  One-third  of  all  the  rolling  stock  of 
the  railroads  of  the  United  States  was  on  the  side  tracks  and  com- 
merce was  paralyzed.  Industries  were  going  out  of  business  and 
laboring  men  were  without  work. 

I  repeat,  sir,  under  such  conditions  that  came  after  the  23d  day 
of  May  no  party  could  have  succeeded.  But  that  the  party  will 
come  back  into  power,  that  it  will  reassert  itself,  that  it  will  get 
together,  that  it  will  come  back  to  the  proposition  of  providing 
enough  revenue  to  support  the  Government  without  issuing  bonds, 
I  have  no  doubt.  That  it  will  be  for  low  taxes  there  can  be  no  ques- 
tion. That  it  will  preserve  and  protect  and  keep  intact  American 
industries  is  the  history  of  the  Democratic  party,  and  on  that  plat- 
form it  will  come  back  into  power. 
1758 


24 

Mr.  President,  I  do  not  want  to  bo  disai^-eeable  to  the  Senator 
from  New  York.  I  have  no  quarrel  with  him.  I  did  not,  as  I 
think,  comment  upon  liis  course  ^\^th  a  view  of  putting  him  in  a 
false  position.  I  would  not  knowingly  do  that  with  any  Senator 
in  this  body.  But  I  have  a  right  to  state  that  if  the  Senator  were 
to  carry  his  present  proposition  the  effect  would  be  to  still  further 
embarrass  the  Treasury. 

Mr.  HILL.  Does  the  Senator  from  Maryland  want  the  income 
tax  collected  if  it  is  unconstitutional?  To  determine  that  question 
is  all  I  have  suggested. 

Mr.  GORMAN.  I  want  the  same  rule  applied  to  the  man  who 
has  an  income  of  over  $4,000  a  year,  and  who  is  a  reasonably  well- 
off  man,  that  you  apply  to  the  poorest  merchant  in  the  cities  of 
New  York  and  Baltimore.  When  the  merchant  pays  either  the 
customs  or  interaal-revenue  tax  he  can  not  embarrass  the  G-overn- 
ment  by  an  injunction,  but  after  he  has  paid  the  tax  he  can  test 
its  constitutionality  in  the  courts.  I  would  not  permit,  as  the 
Senator  from  New  York  would  do,  the  richer  man,  the  man  more 
able,  to  have  a  different  remedy  from  that  which  we  have  always 
given  to  the  poorer  man. 

Mr.  HILL.     Will  the  Senator  from  Maryland  aUow  me? 

Mr.  GORMAN.     Certainly. 

Mr.  HILL.  Neither  would  I.  I  was  not  aware  that  there  was 
any  other  provision  of  the  law  that  anybody  was  claiming  to  be 
unconstitutional.  If  there  is,  let  him  point  it  out,  and  if  we  can 
facilitate  the  disposition  of  that  question  it  strikes  me  it  would  be 
the  proper  thing  to  do.  I  did  not  suppose  that  there  was  any 
question  about  any  other  provision  of  the  law. 

Mr.  GORMAN.  Mr.  President,  I  shall  not  detain  the  Senate 
by  reading  the  law.  The  Senator  from  Ohio  [Mr.  Sherman]  made 
this  case  so  plain  on  Friday  that  there  can  not  be  any  question 
about  it.  The  Senator  from  New  York  is  seeking  to  change  the 
law,  to  make  a  special  provision  in  this  case.  It  was  perfectly 
legitimate  in  the  argument  to  say  to  that  Senator,  and  try  to  demon- 
strate it,  that  his  proposition  was  unfair  upon  its  face  and  would 
be  disastrous  to  the  Treasurj-;  and  that  is  all  I  say  about  that 
matter. 

But,  Mr.  President,  the  Senator  from  New  York  wants  to  know 
why  I  do  not  bring  in  some  proposition  to  remedy  other  defects 
in  the  law.  It  is  not  a  part  of  my  special  duty,  sir.  I  am  not  a 
member  of  the  Finance  Committee',  l)ut  I  am  ready  to  aid  in  any 
sound  measure  in  that  direction,  as  I  have  stated.  Those  who  are 
charged  with  the  resjjonsibility  will,  I  have  no  doubt,  bring  it  for- 
ward, and  for  the  benefit  of  the  Senator  from  New  York.  Every 
Democrat  here  knows  that  from  the  beginning  of  this  session  I 
joined  with  every  Senator  on  this  side  in  saying  we  ought  to  do  it. 
We  are  doing  it,  or  trying  to  do  it,  for  I  have  frankly  stated  that 
the  problem  is  so  great  that  up  to  this  time  I  have  not  found  a 
dozen  Senators  on  either  side  of  the  Chamber  who  can  agree  on 
t  he  proper  remedy.  The  Senator  from  New  York,  like  myself,  has 
not  formulated  such  a  measure. 

He  probably  would  siiggest  a  remedy,  he  says,  but  there  is  no 
use  to  do  it  in  this  body  until  we  change  the  rules;  that  it  is  not 
possible  to  do  anything  here.  He,  vnth  all  his  experience  as  the 
great  governor  of  the  greatest  State  in  the  Union,  the  great  finan- 

1758 


25 

cial  center  of  this  continent,  one  supposed  to  be  in  direct  contact 
with  all  the  best  financial  minds,  representing  at  least  a  commu- 
nity that  claim  they  have  the  greater  portion  of  the  ability  to  de- 
vise a  plan,  hesitates,  refuses  to  enlighten  the  country  and  the 
Senate  with  a  proposition  that  wonld  help  to  solve  this  problem, 
because,  as  he  says,  the  rules  of  the  Senate  have  not  been  changed. 
He  will  not  do  it  until  that  is  done,  and  he  seeks  to  hold  me  re- 
sponsible for  a  failure  to  change  the  rules. 

Mr.  President,  I  have  been  a  member  of  this  body  for  over  twelve 
years.  I  have  been  connected  with  it  from  the  time  I  was  the 
size  of  that  boy  who  sits  upon  the  step  of  the  rostrum.  I  have 
seen  since  1852  all  the  great  measures  that  have  been  considered, 
not  only  for  the  ordinary  conduct  of  the  Q-overnment,  but  all  the 
great  measures  that  were  necessary  to  carry  throitgh  the  most 
enormous  war  that  has  ever  been  known  within  our  time.  There 
never  has  been  a  measure  yet  that  looked  to  ameliorating  the  con- 
dition of  the  people,  to  advancing  their  interests  at  home,  to  adding 
to  the  honor  of  the  people  of  the  country  and  its  credit  abroad, 
that  the  Senate  has  not  passed  on  with  these  identical  rules;  no 
Senator  with  the  ability  of  the  Senator  from  New  York  has  ever 
in  the  history  of  this  body  failed  to  get  a  measure  through  it  when 
the  measure  met  with  the  approval  of  the  majority. 

Mr.  President,  with  your  rules  as  they  are,  with  perfect  freedom 
of  debate,  we  have  passed  the  McKinley  bill,  the  most  extraordinary 
tariff  bill,  as  we  Democrats  thihk,  ever  placed  upon  the  statute 
book.  Yet  when  the  time  came  to  vote,  when  you  on  the  other  side 
of  the  Chamber  had  the  majority,  you  passed  j-our  bill.  There  are 
not  manj^  measures  of  importance  now  upon  the  statute  book  that 
have  not  been  conceived,  framed,  and  passed  in  this  body.  There 
is  not  a  single  case  where  if  the  majority  of  the  body  was  in  favor 
of  a  measure  it  was  ever  defeated.  There  has  been  but  once  in  the 
history  of  the  body  an  appropriation  bill  defeated,  and  that  was  in 
1852,  when  a  distinguished  Senator  from  Georgia,  Mr.  Robert 
Toombs,  taking  advantage  of  the  last  two  hours  of  the  session, 
spoke  the  time  out  and  compelled  an  extra  session  of  Congress;  and 
the  very  fact  that  he  did  it  injured  the  Democratic  party,  becaiise 
they  violated  the  traditions  and  the  rules  of  the  Senate — the  un- 
written rule,  which  is  more  binding  than  any  written  rule. 

Mr.  President,  the  Senate  of  the  United  States  has  passed  more 
measures  than  the  House  of  Representatives  in  every  Congress  for 
the  last  ten  years,  with  rules  in  that  body  which  absolutely  stifle 
debate,  which  prevent  the  utterance  of  the  Representatives  of 
freemen — a  body  which  passed  the  tariff  bill  in  1890  without  read- 
ing more  than  15  pages  of  the  150  pages  of  the  bill.  It  passed 
measure  after  measure  during  the  last  Congress  that  was  scarcely 
read  and  never  fully  debated.  That  has  been  the  case  since  the 
drastic  rules  have  prevailed  in  the  other  House.  No  full  debate, 
no  opportunity  to  present  public  questions  and  let  the  people 
understand  them,  has  been  in  existence  except  on  this  floor.  The 
liberty  of  debate,  the  right  of  the  people  to  know  what  their  ptib- 
lic  servants  are  doing,  is  left  alone  to  this  body.  Nowhere  else 
does  it  exist.  And  yet  the  Senator  from  New  York  says  we  can 
not  pass  bills  here. 

What  is  the  test,  Mr.  President?  It  is  the  action  of  the  Senate. 
It  is  its  history  in  the  past.     The  body  has  grown,  says  the  Sena- 

1758 


26 

tor  from  New  York.  Yes,  we  have  88  members  when  full,  in  this 
body,  and  will  soon  have  a  hundred.  But  does  the  Senator  know 
the  fact  that  since  the  membership  of  the  Senate  has  increased  to 
88  members  it  has  transacted  more  business,  passed  more  bills  than 
it  did  when  it  had  44  members?  Does  the  Senator  know  how  many- 
bills  have  been  passed  by  the  Senate  without  rules,  as  he  terms  it? 
I  will  give  the  figures. 

In  the  Forty-ninth  Congress  the  House  passed  1,820  bUls,  the 
Senate  passed  1,997  bills.  In  the  Fiftieth  Congress  the  House 
passed  2,284  bills  and  the  Senate  passed  2,818  bills.  In  the  Fifty- 
second  Congress  the  House  passed  882  bills  and  we  passed  in  the 
Senate  1,242  bills.  In  the  Fifty-third  Congress,  up  to  December 
last,  the  House,  where  they  can  apply  the  rule  and  close  debate 
in  an  hour,  passed  624  bills  and  we  passed  724^a  hundred  more; 
and  there  was  not  a  single  bill  of  importance  left  on  the  files  of 
the  Senate  that  ought  to  have  passed. 

Now,  during  these  two  Congresses  where  the  question  was  of  a 
political  nature,  where  the  McKinley  bill  came  over,  as  I  said, 
without  having  been  read  in  another  place  halfway  through, 
what  did  the  Senate  do?  The  Senate  disctissed  it  and  dissected  it, 
put  600  amendments  upon  it,  and  made  in  fact  a  new  tariff  bill. 
If  we  had  passed  that  bill  as  it  came  from  the  other  House,  we 
should  have  had  a  deficiency  of  $100,000,000  in  revenue.  This 
body  under  its  rules  had  the  opportunity  to  discuss  the  measure. 
My  friend  from  Missouri  on  my  right  [Mr.  Vest]  ,  entered  largely 
into  that  debate,  as  did  other  Senators  on  the  Finance  Committee. 

I  do  not  know  that  the  Senator  from  Missouri  was  on  the  Finance 
Committee  at  that  time,  but  he  took  the  role  on  account  of  the  ab- 
sence of  some  Senator  who  was  a  member  of  that  committee.  We 
worked  day  and  night  and  kept  you  here,  we  dissected  your  bill, 
pointed  out  its  shortcomings,  showed  you  where  it  would  operate 
badly,  and  forced  you  by  that  debate  to  amend  it.  Infamous  as 
we  Democrats  thought  that  bill  was  as  you  passed  it,  it  would  have 
been  much  more  so  if  you  had  had  a  gag  law  here  and  forced  us  to 
a  vote  without  being  able  to  expose  its  shortcomings. 

Measured  by  the  only  proper  standard  by  which  you  can  gauge 
the  action  of  the  Senate,  I  submit  that  all  this  talk  of  the  Sena- 
tor from  New  York  and  others  who  think  with  him  that  an 
amendment  of  the  rules  of  the  Senate  is  necessary  to  legislation 
is  idle  vaporing.  It  is  not  true,  sir.  There  never  was  a  period  in 
my  time  where,  if  you  had  a  clear  majority,  you  could  not  come 
to  a  vote,  not  always  in  a  day,  not  always  in  a  week,  but  it  would 
be  reached  in  proper  time.  It  was  the  intention  of  the  framers 
of  the  Constitution  that  here  all  the  States  should  be  equal,  that 
Delaware  and  New  York  should  have  the  same  voice  here,  that  a 
State  containing  a  population  of  130,000  should  have  the  same 
power  as  one  containing  3,000,000.  This  is  a  body  composed  of 
different  political  parties,  but  it  is  a  body  of  patriotic  Americans, 
who  will,  when  the  proper  time  comes,  always  vote  upon  a  meas- 
ure. 

Now,  I  say,  let  the  Senator  from  New  York  bring  forth  his 
measure  to  remedy  the  defects  in  the  currency  laws,  and  the  Senate 
will  be  ready  to  adopt  them  if  they  are  wise  meastires,  and  if  there 
be  a  majority  in  their  favor  they  will  be  passed. 

1758 


27 

Mr.  President,  not  only  has  this  body  exceeded  the  other  House 
in  the  number  of  bills  which  has  been  passed  and  in  the  character 
of  legislation,  but  I  will  venture  the  assertion — and  later  on  I  in- 
tend to  furnish  a  list  of  the  great  measures  which  have  originated 
in  this  body — that  there  is  scarcely  a  statute  upon  the  books  since 
1850  which  is  far-reaching,  which  |is  broad,  which  has  been  per- 
manent, which  is  necessary  for  the  promotion  of  the  welfare  of 
the  country,  which  has  not  originated  in  this  body.  There  is  not 
a  single  one  which  has  come  from  the  other  House  which  has  not 
been  amended  or  remodeled  before  being  finally  accepted.  This 
applies  to  every  tariff,  to  every  currency  bill,  and  every  bUl  of  any 
importance  which  is  now  upon  the  statute  books. 

In  addition  to  that,  Mr.  President,  without  rules,  as  the  Senator 
would  say,  what  else  has  this  body  done?  Exercising  the  power 
delegated  to  it  by  the  Constitution,  the  Senate  has  conferred  and 
acted  with  the  President  of  the  United  States  in  the  hundreds  of 
thousands  of  those  appointments  which  have  been  made  since  this 
body  was  created.  There  is  not  a  relation  we  have  with  any  for- 
eign Grovemment  on  the  face  of  the  earth  but  has  been  made  by 
treaty,  and  the  treaties  embrace  every  subject  from  trade  to  the 
acquisition  of  territory.  In  the  transaction  of  this  business,  in 
addition  to  the  legislation  which  we  have  passed  in  the  ordinary 
way,  weeks  and  months  of  the  time  of  the  Senate  has  been  con- 
sumed, and  it  must  be  remembered  that  the  other  branch  of  Con- 
gress does  not  deal  with  the  great  questions  of  treaties  and  with 
other  executive  matters. 

This  body  has  instructed  Presidents  and  Secretaries  of  State;  it 
has  approved  of  their  acts  or  condemned  their  acts,  or  suggested 
amendments  to  treaties,  and  I  venture  to  say  that  from  the  history 
of  what  has  been  done  in  executive  session,  exposed  as  it  has  been 
up  to  a  recent  period,  it  will  be  shown,  notwithstanding  our  great 
success  in  the  passage  of  these  bills,  that  the  impress  of  the  Senate 
is  upon  many  of  the  important  treaties  which  have  been  made. 

Mr.  President,  I  only  desire  to  say  in  conclusion  that  I  have  no 
quarrel  with  the  Senator  from  New  York.  I  respect  his  views; 
I  accord  to  him  the  same  right  which  I  have  myself  to  discuss  all 
measures  and  to  oppose  them  if  he  sees  proper;  but,  sir,  when  it 
comes  to  a  question  such  as  that  which  is  now  pending,  I  did 
have  a  right,  as  a  member  of  the  Democratic  party,  as  a  member 
of  the  Committee  on  Appropriations  (which  is  charged  with  the 
duty  of  formulating  the  appropriation  bills,  of  defending  them, 
of  seeing  that  the  provisions  of  law  are  carried  out)  to  criticise 
him  as  freely  as  I  do  the  Senator  from  Pennsylvania.  I  have  no 
desire,  however — I  think  I  am  above  that— to  associate  the  Sena- 
tor from  New  York  with  any  Senator  on  the  other  side  for  the 
purpose  of  being  disagreeable  to  him.    That  is  not  in  my  mind. 

The  Senator  from  New  York  claims  to  be  and  was  elected  here 
as  a  Democrat,  and  is  a  Democrat,  but  it  so  happens  that  the  two 
propositions  coming  from  those  two  Senators  on  different  sides  of 
the  aisle  are  identical — not  by  combination — but  the  effect  of  the 
action  of  both  Senators  is,  in  my  judgment,  to  deplete  the  Treas- 
ury. I  have  said  so  in  my  remarks  during  the  early  part  of  the 
day,  and  I  repeat  it.  I  say  that  the  Senator  from  New  York  is 
making  his  fight  at  the  wrong  time.  I  say  that  if  the  Senator 
from  New  York  were  to  succeed  in  his  effort  it  would  still  f m-ther 

1758 


28 

embarrass  the  Treasury.  Bflieving  that.  sir.  I  protest  against  his 
action,  and  I  appeal  to  every  Senator  on  this  .side  of  the  Clianiber, 
and  I  appeal  to  Senators  on  the  other  side  of  tlie  Chamber,  not  be- 
cause we  want  any  favors  from  you,  but  as  American  Senators, 
to  stand  by  this  proposition,  wliich  yoii  know  to  be  right. 
1758 


ISSUE  OF  SHORT-TERM  CERTIFICATES. 


SPEECH 


HON.  ARTHUR  P.  GORMAN, 


OF     MARYLAND, 


IN  THE 


SENATE  OF  THE  UNITED  STATES, 


WEDNESDAY,  FEBRUARY  27,  1895. 


"WA.SHINGTOIfl'. 

1895. 


SPEECH 

OF 

HO^.   ARTHUR    P.   GORMAN. 


The  Senate  having  under  consideration  the  bill  (H.  R.  8518)  making  appro- 
priations for  sundry  civil  expenses  of  the  Government  for  the  fiscal  year 
ending  June  30,  1896,  and  for  other  purposes,  the  question  being  upon  the 
following  amendment  reported  from  the  Committee  on  Appropriations: 

Sec.  2.  That  in  order  to  provide  the  moneys  not  supplied  from  current  reve- 
nues and  miscellaneous  receipts,  and  necessary  for  the  execution  of  this  act 
and  necessary  for  the  execution  of  any  act,  or  all  the  other  acts  passed  or  to 
be  passed  during  the  present  session  of  Congress  appropriating  money  to  be 
paid  out  of  the  Treasury  for  the  fiscal  year  ending  June  30,  1896,  and  also  in 
order  to  provide  the  moneys  necessary  to  be  paid  out  of  the  Treasury  on  ac- 
count of  appropriations  heretofore  made  for  the  fiscal  years  ending  Jime  30, 
1893,  June  30,  1894,  and  June  30,  1895,  and  not  covered  into  the  Treasury,  the 
Secretary  of  the  Treasury,  with  the  approval  of  the  President,  be,  and  is 
hereby,  authorized  to,  from  time  to  time,  borrow  on  the  credit  of  the  United 
States  such  sums  of  money  as  may  be  necessary  to  meet  said  expenditures, 
and  to  issue,  sell,  and  dispose  of,  at  not  less  than  par,  for  lawful  money  of  the 
United  States,  such  an  amount  of  certificates  of  indebtedness,  payable  to  the 
bearer,  of  the  denominations  of  twenty,  fifty,  and  one  hundred  dollars,  or 
any  multiple  of  $100  not  exceeding  $1,000.  as  may  be  needed  for  said  purposes, 
bearing  at  the  rate  of  not  exceeding  3  per  cent  per  annum,  payable  semian- 
nually, and  redeemable  at  the  pleasure  of  the  United  States  after  two  years 
frora'their  date;  and  the  Secretary  of  the  Treasury  is  hereby  authorized, 
with  the  approbation  of  the  President,  to  cause  such  portion  of  said  certifi- 
cates as  may  be  deemed  expedient  to  be  issued  by  the  Treasurer  in  payment 
of  warrants  in  favor  of  public  creditors,  or  other  persons  lawfully  entitled  to 
payment,  who  may  choose  to  receive  such  certificates  in  payment  at  par. 

And  the  Secretary  of  the  Treasury  may,  in  his  discretion,  under  rules  and 
regulations  to  be  prescribed  by  him,  sell  and  dispose  of  the  certificates 
herein  authorized  at  designated  depositories  of  the  United  States,  and  at  such 
post-offices  as  he  may  select;  and  the  Secretary  shall  use  the  moneys  received 
for  such  certificates  for  the  purposes  herein  prescribed,  and  for  none  other: 
Provided,  That  the  total  amount  of  such  certificates  shall  not  exceed  $100,000,- 
000:  And  provided  further,  Thac'the  power  to  issue  such  certificates  shall 
determine  on  the  1st  day  of  July,  1896. 

And  hereafter  any  United  States  bonds  sold  or  disposed  of  shall  first  be 
ofl'ered  to  the  public  for  a  period  of  not  less  than  twenty  days,  under  rules 
and  regulations  to  be  prescribed  by  the  Secretary  of  the  Treasury,  and  shall 
be  sold  to  the  highest  bidder,  in  case  such  bids  or  any  of  them  are  satisfactory. 

Mr.  GORMAN  said: 

Mr.  President:  The  point  of  order  having  been  submitted  to 
the  Senate,  naturally  the  main  question  comes  upon  the  first  vote, 
whether  this  proposition  shall  be  considered,  whether  it  is  in 
order,  whether  it  is  proper,  for  this  provision  to  be  inserted  upon 
an  appropriation  bill,  and  necessarily  the  merits  of  the  qtiestion 
involved  must  be  touched  upon  in  the  disctission.  I  hope  to  be 
verj^  brief  and  simply  to  state  the  facts  as  the  Committee  on  Ap- 
propriations understood  them,  which  made  it,  in  our  judgment, 
necessary  that  such  a  provision  should  be  inserted  in  an  appro- 
priation bill.  It  is  well  known  that  at  this  hour  in  the  session,  if 
relief  is  to  be  given  to  the  Treasury,  if  additional  authority  to  is- 
sue certificates  of  indebtedness  is  necessary  to  maintain  the  credit 
of  the  Government,  the  only  possible  way  in  which  it  can  be  done 
is  on  an  appropriation  bill. 

1904  8 


I  regret  exceedingly,  Mr.  President,  that  it  has  become  the  duty 
of  any  of  us  to  inaugurate  and  to  suggest  here  any  proposition  of 
this  kind.  I  regret  exceedingly  that  such  a  proposition  did  not 
reach  us  from  a  coordinate  branch  on  a  separate  measure  early 
in  the  session,  when  it  could  have  been  deliberated  upon  and  fully 
discussed. 

As  intimated  by  the  Senator  from  Rhode  Island  [Mr.  Aldrich] 
and  by  the  Chair,  two  years  ago  this  identical  qxiestion  was  be- 
fore the  Senate,  as  to  whether  it  was  proper  to  authorize  the  issu- 
ing of  bonds  for  the  purprse  of  supplying  deficiencies  in  the 
Treasury.  It  was  held  in  that  case,  as  wUl  be  seen  by  reference 
to  the  Journal  of  the  Senate,  that  the  Senate  by  a  vote  of  28  to  18 
determined,  as  they  had  previously  in  years  gone  by,  that  it  was 
perfectly  legitimate,  perfectly  proper,  to  put  such  a  provision  ui)on 
an  appropriation  bill  it  the  requirements  of  the  Treasury  demanded 
it.     So  much  for  that. 

Mr.  President,  I  trust  that  in  the  discussion  of  a  question  so 
simple  as  this  we  may  be  able  to  confine  ourselves  to  the  one  ques- 
tion, the  needs  of  the  Treasury  Department,  whether  it  is  abso- 
lutely necessary  for  the  proper  conduct  of  that  Department  to  have 
the  provision  of  law  contained  in  this  amendment.  I  know  how 
difficult  it  will  be  to  keep  out  of  the  discussion  all  of  the  questions 
which  are  involved  in  our  financial  policy,  which  have  been  sug- 
gested and  discussed  in  both  Houses.  Here,  where  debate  is  un- 
limited, I  know  it  is  going  very  far  to  make  such  an  appeal,  and 
yet  I  must  appeal  to  the  Senate  to  determine  this  question  upon 
the  one  proposition. 

Mr.  WOLCOTT.  Will  the  Senator  permit  me  to  ask  him  a 
question,  which  I  do  solely  for  information,  he  being  a  member  of 
the  Committee  on  Appropriations?  Has  not  the  Secretary  of  the 
Treasury  advised  the  Senate  that  he  does  not  need  more  money  at 
this  time? 

Mr.  GORMAN.  If  the  Senator  will  only  permit  me  in  my  crude 
way  to  go  along  and  make  my  statement,  I  shall  be  indebted  to  him. 

Mr.  WOLCOTT.  I  shall  do  so  with  pleasure,  but  I  hope  before 
the  Senator  sits  doAvn  he  will  answer  my  question. 

Mr.  GORIVIAN.  I  shall  be  very  glad  to  do  so,  and  that  is  the 
whole  qiTestion  involved. 

Mr.  WOLCOTT.     Oh!    I  did  not  know  that. 

Mr.  GORMAN.  If  we  could  by  common  consent  take  up  in 
these  closing  hours  of  the  session,  in  that  spirit  alone,  the  question 
as  to  whether  it  is  necessary  for  the  honor  of  the  Government  to 
maintain  its  credit  and  enable  the  Secretary  of  the  Treasury  to 
discharge  his  duty  in  such  a  way  as  not  to  trench  upon  the  rights 
of  anybody,  I  trust  we  may  do  it,  and  eliminate  all  question  as  to 
the  kinds  of  currency  we  are  to  have.  If  that  can  not  be  done,  as 
a  matter  of  course  the  Senator  from  Colorado  and  other  Senators 
who,  after  the  facts  are  presented,  do  not  believe  that  such  a  pro- 
vision is  necessary  for  the  Treasury,  will  vote  against  the  propo- 
sition. If  there  is  a  determination  on  the  part  of  any  number  of 
Senators  to  take  advantage  of  this  opportunity  to  go  into  all  the 
questions  which  are  involved  in  our  financial  structure  in  the 
closing  hours  of  the  session,  as  a  matter  of  course  they  must  take 
that  responsibility,  which  would  prevent  action  and  leave  the 
Treasury  embarrassed,  if  it  would  be  embarrassed,  vnthout  this 
provision. 
1904 


Mr.  President,  as  to  the  necessities  of  the  Government 

Mr.  VILAS.     I  wish  to  make  a  parliamentary  inquiry. 

The  VICE-PRESIDENT.  The  Senator  will  state  his  parlia- 
mentary inquiry. 

Mr.  VILAS.  I  wish  to  ask  whether  when  the  question  of  order 
is  submitted  to  the  Senate  it  opens  for  discussion  the  whole  sub- 
ject, which  is  only  to  be  discussed  if  in  order? 

The  VICE-PRESIDENT.  It  opens  for  discussion  the  question 
as  to  whether  the  point  of  order  shall  be  sustained  or  overruled. 
That  is  the  question  now  before  the  Senate.  The  Chair  can  not, 
however,  limit  Senators  or  indicate  to  them  the  line  of  argument 
thej^  shall  pursue. 

Mr.  TELLER.  Mr.  President,  I  should  like  to  suggest  to  the 
Senator  from  Wisconsin  [Mr.  Vilas]  that  the  Senator  from  Mary- 
land [Mr.  Gorman]  or  any  other  Senator  is  at  liberty  to  discuss 
any  question  he  sees  fit,  there  being  no  rule  which  will  prevent 
the  discussion  of  this  or  any  other  question  when  a  Senator  has 
the  floor. 

Mr.  GRAY.    Except  the  general  parliamentary  rule. 

Mr.  TELLER.  There  is  no  parliamentary  rule  which  has  been 
applied  in  this  Chamber  which  requires  a  Senator's  speech  to  be 
germane  to  the  subject  pending  before  the  body. 

Mr.  GRAY.  The  pai'liamentary  law  is  stated  in  Jefferson's 
Manual. 

The  VICE-PRESIDENT.  The  Chair  has  stated,  in  reply  to  the 
parliamentary  inquiry  of  the  Senator  ftom  Wisconsin,  that  the 
pending  question,  being  the  question  of  order,  has  been  submitted 
to  the  Senate,  but  it  is  not  for  the  Chair  to  indicate  to  Senators  the 
line  of  argument  they  shall  pursue  in  discussing  the  question. 
The  Senator  from  Maryland  [Mr.  Gormajst]  is  entitled  to  the  floor. 

Mr.  GORMAN.  Mr.  President,  I  have  no  desire  to  detain  the 
Senate.  If  we  could  come  to  a  vote  on  this  question  without  dis- 
cussion I  would  be  content.  That,  however,  can  not  be.  There- 
fore, as  a  member  of  the  Committee  on  Appropriations,  which 
reported  this  proposition,  I  will  briefly  and  frankly  state,  without 
reflecting  iTj^on  anybody,  what  we  believed  to  be  the  necessities 
for  such  a  grant.  That  is  the  question,  as  I  understand  it,  to  be 
determined  when  we  vote  to  consider  this  proposition. 

There  is,  therefore,  in  my  view,  Mr.  President,  but  one  ques- 
tion involved  in  this  matter.  Is  the  Treasury  in  such  condition 
that  it  can  provide  for  the  wants  of  the  Government  under  the 
present  laws?  Are  the  revenues  of  the  Government  up  to  this 
hour,  brought  in  by  the  existing  laws,  sufficient  to  meet  the  ap- 
propriations made  annually  by  Congress  and  the  permanent  appro- 
priations? 

Mr.  President,  if  it  should  appear  from  the  oflficial  reports  of 
the  Treasury  that  we  have  appropriated  more  money  than  can  be 
supplied  from  the  revenvies  of  the  Government,  if  it  should  ap- 
pear that  our  actual  expenditures  are  greater  than  our  receipts, 
then  I  submit  to  the  Senate  we  can  not  afford  to  adjourn  until 
provision  shall  have  been  made  to  meet  that  deficiency,  unless 
the  Senate  and  the  House  of  Representatives  desire  that  bonds  of 
the  United  States  running  for  tliirty  years,  at  4  per  cent  interest, 
or  bonds  of  the  United  States  running  for  ten  years,  and  bearing 
5  per  cent  interest,  shall  be  sold  to  meet  the  deficiency.  I  take  it 
for  granted  that  there  is  not  a  Senator  upon  this  floor  who  would 

1904 


have  the  Government  repTidiate  a  single  obligation  and  to  have  a 
payment  which  ought  to  be  made  by  the  Government  postponed 
because  of  the  lack  of  revenue. 

The  Senate  has  asked  the  Secretary  of  the  Treasury  in  various 
resolutions  whether  or  not  the  revenues  of  the  Government  are 
equal  to  the  expenditures;  whether  in  fact  it  is  necessary  to  give 
him  further  authoritj'  to  meet  the  appropriations  made  by  Con- 
gress. The  Secretary  has  answered  those  inquiries.  I  am  bound 
to  say,  sir,  that  the  form  of  the  answers  that  have  been  made  are 
on  their  face  somewhat  misleading,  and  that  those  unfamiliar 
with  the  condition  of  affairs  in  the  Treasiiry  might  draw  the  con- 
clusion that  there  is  a  sufficient  amount  already  provided  to  meet 
the  demands  on  the  Treasury.  But  I  will  try  to  give  to  the  Sen- 
ate the  exact  condition  of  the  Treasury. 

The  Secretary  of  the  Treasury  states  that  on  July  1,  1890,  we 
had  in  the  Treasury  from  revenue  from  all  sources  an  actual  bal- 
ance available  for  the  payment  of  debts  of  the  Government  of 
$89,993,104.20.  We  began  on  that  date  with  that  amount.  Every 
dollar  that  has  been  received  into  the  Treasury,  except  the  postal 
receipts,  from  June  30,  1890,  to  the  31st  of  December  just  past, 
1894 — that  is  to  say,  to  the  1st  day  of  January  of  this  year — amounts 
to  $1,590,481,336.90.  The  expenditures— that  is,  the  payments  out 
of  the  Treasury  during  the  same  period — from  June  30,  1890,  to 
December  31.  1894,  four  years  and  a  half ,  have  been  $1,737,390,- 
560.93,  showing  that  the  expenditures  during  that  whole  period 
have  been  .$146,809,224.03  more  than  the  Treasury  received  from 
all  sources.  I  speak  of  the  actual  expenditures  and  actual  pay- 
ments out  of  the  Treasury.  We  e.xpeiided — paid  out — not  only 
every  dollar  received  from  July.  1890.  to  December  31,  1894,  but 
all  of  the  §89.993,104.20  on  hand  Jiily  1,  1890,  and  §56,816,119.83 
more,  every  dollar  of  which  was  from  the  proceeds  of  the  sale  of 
bonds. 

The  statement  in  detail,  which  is  taken  from  the  books  of  the 
Department,  is  as  follows: 

Cash  balance  available  for  current  oxpenses  of  the  Govern- 
ment (exchiding  gold  reserve),  Jiilv  1,  l,-!)ii $89,993,104.20 

Eeveuues  for  fiscal  year  ending  .June  ;iii,  Isdl...  S^WS, 6l2, 447. 31 
Revenues  for  fiscal  year  ending  .Tun!':i(i,  is;);,'...  3.'j4, 937, 784. 24 
Revenues  for  fiscal  year  ending  .1  unc  :>().  is!i:{. . .  ;5A5, 819, 628. 78 
Revenues  for  fiscal  year  ending  .June  :>0,  lMt+. ..  297,723,019.25 
Revenues  for  six  months  ending  December  31, 

1894 - - -    l.')9,389,457.32 

1,. 590, 481. 336. 90 

Total  available l,l)Sl),474,441.10 

Expenditures  for  fiscal  year  ending  June  3(i, 

1891 - 409,780,016.72 

Expenditures  for  fiscal  year  ending  June  IW, 

1892 - 382, 597,  .510. 56 

Expenditures  for  fiscal  year  ending  June  30, 

1893 390,186,098.99 

Expenditures  for  fiscal  year  ending  June  30,  * 

1891 307,746,867.03 

Expenditures  for  six  months  ending  December 

31,1894. 186.979, 467. 03 

Total  expended 1,737,290,560.93 

Expenditures  in  excess  of  revenues  and  available  cash.. .56,816,119.83 

The  above  statement  of  expenditures  includes  amounts  paid  for  deficien- 
cies in  the  postal  revenues  and  amounts  applied  to  the  sinking  fund.    The 
deficiencies  in  the  postal  service  being  thus  taken  into  the  account  on  the 
1904 


expenditure  side,  it  is  unnecessary  to  add  the  revenue  and  expenditure  to 
the  totals  on  either  side,  as  the  oalance  of  the  expenditures  are  paid  from 
the  revenues  of  the  Post-Ofhce  Department — one  offsetting  the  other — and 
would  not  change  the  final  result. 

Excess  of  payments  over  receipts  from  Juno  30, 1891,  to  De- 
cember 81, 189i  ( four  years  and  six  months) $146, 809, 234. 03 

Mr.  President,  the  question  arises  whether  that  condition  of 
affairs  will  continue  during  the  next  year.  The  Secretary  of  the 
Treasury  in  his  answer  to  a  resolution  of  the  Senate  has  said  that 
during  the  calendar  year  of  1895  he  will  have  revenue  enough  to  meet 
the  expenses  of  the  Government.  That  is  misleading.  The  ac- 
counts are  made  up  from  July  1  to  June  30.  I  shall  demonstrate, 
I  think,  that  the  Secretary  of  the  Treasury  is  entirely  mistaken  in 
that  statement ;  that  with  all  the  revenues  he  will  get  this  calen- 
dar year  he  will  have  a  deficiency  of  over  $30,000,000  if  he  pays  the 
debts  contracted  or  appropriations  made;  and  for  the  fiscal  year 
which  ends  June  next  he  will  have  a  deficiency  of  from  $40,000,000 
to  $60,000,000,  unless  he  suspends  payments  on  various  accounts 
to  a  greater  extent  than  heretofore.  It  is  only  by  neglecting  to 
audit  or  by  postponing  the  payments  that  the  deficiency  can  be 
kept  within  the  limits  I  have  named, 

Mr.  ALDRICH.  Will  the  Senator  from  Maryland  permit  me? 
I  understand  him  to  state,  as  his  opinion,  that  there  will  be  a  defi- 
ciency of  $60,000,000  in  the  present  fiscal  year,  instead  of  a  sur- 
plus of  $23,000,000,  as  is  estimated  by  the  Secretary  of  the  Treasury. 

Mr.  GORMAN.  For  the  fiscal  year.  But  the  Secretary  of  the 
Treasury  does  not  estimate  a  surplus  for  the  fiscal  year.  He  esti- 
mates a  deficiency  of  twenty-odd  million  dollars  during  the  fiscal 
year. 

Mr.  ALDRICH.  What  is  the  estimate  of  the  Senator  from 
Maryland  for  the  calendar  year? 

Mr.  GORMAN.  I  say,  taking  the  condition  of  the  appropria- 
tions as  they  are  to-day  and  the  revenues — of  coui'se  it  is  a  guess 
from  now  until  December  next,  but  I  will  take  the  average  for 
the  past  three  or  four  years  and  the  appropriations — that  if  the 
appropriations  we  are  now  making  are  met,  if  the  obligations  of 
the  Government  are  discharged,  there  will  be  a  deficiency  of 
$30,000,000  for  the  calendar  year.  But  for  the  fiscal  year  thei'e  can 
be  no  question  as  to  the  deficiency.  The  Secretary  admits  that. 
But  the  Secretary  of  the  Treasury,  in  the  report  to  the  Senate, 
which  is  dated  February  18,  says: 

The  available  cash  balance  in  the  Treasury  at  the  close  of  biisiness  this  day 
(18th  of  February,  1895),  exclusive  of  gold  reserve,  is  $99,875,284.32. 

Then  says: 

It  is  not  probable  that  such  deficiencies  will  occur  during  the  remainder  of 
the  current  fiscal  year  as  Mall  exceed  the  availaljle  balance  now  on  hand,  and 
it  is  estimated  that  during  the  next  fiscal  year  the  receipts  will  exceed  the 
expenditures. 

It  will  be  noted  that  this  entire  balance  came  directly  from  the 
sale  of  bonds.  The  Secretary  thinks  it  is  sufficient,  with  current 
reveniTes,  to  carry  him  through  to  July  1,  IHl'.").  If  youcoimt  that 
balance  and  want  to  continue  the  process  of  selling  b(mds  for 
gold  and  then  permitting  the  holders  of  United  States  and  Treas- 
ury notes  to  present  them  and  draw  the  gold  out,  as  the  Secre- 
tary frankly  says  is  done,  and  then  turn  the  Treasurj"  notes  into 
the  general  accounts  to  pay  the  expenses  of  the  Government,  then 
1904 


8 

of  course  there  will  be  no  necessity  for  the  provision  which  we 
have  reported.  But  I  submit  that  it  is  not  wise  for  Congress  to 
adjourn  without  making  some  other  and  more  advantageous  pro- 
vision, such  as  that  now  proposed,  when  the  President  of  the 
United  States,  in  his  message  to  us,  has  frankly  stated  that  if  the 
emergency  arises  he  will  continue  to  sell  those  bonds.  It  is  too 
expensive ;  it  is  piling  up  the  public  debt  in  a  form  that  is  dis- 
tasteful to  the  people  of  the  country.  I  do  not  criticise  the  Presi- 
dent for  his  action  in  the  past.  I  have  not  one  word  to  say  in  re- 
gard to  it  except  what  I  have  said  heretofore,  that  the  honor  and  the 
credit  of  the  Government  must  be  maintained,  and  if  Congress 
refuses  or  fails  to  provide  sufficient  money  otherwise,  and  we 
proceed  under  the  construction  of  law  given  by  the  Department 
and  by  the  President,  which  I  think  is  a  mistaken  one,  not  war- 
ranted by  the  act  of  1875,  but  which  is  one  that  has  been  acted 
upon  and  one  that  the  President  declares  to  Congress  he  will  con- 
tinue to  exercise,  then  the  responsibility  will  be  upon  us.  I  wish 
to  change  that  policy,  Mr.  President;  I  wish  to  make  provision  in 
this  matter  for  a  certificate  of  indebtedness,  running  only  for  two 
years,  redeemable  at  the  option  of  the  Government,  so  that  there 
can  be  no  excuse  hereafter  for  the  Department  to  sell  bonds  run- 
ning ten  or  twenty  years  or  thirty  years. 

Mr.  PLATT.  As  the  Senator  from  Maryland  is  going  on,  will 
he  at  some  time  state,  if  he  can,  the  amount  of  the  surplus  now 
in  the  Treasury,  which  we  all  know  is  the  result  of  borrowing 
money?    But  there  is  some  surplus  in  the  Treasury. 

Mr.  AliDRICH.  That  depends  in  some  degree  upon  the  extent 
of  the  reserve  fund  of  course. 

Mr.  GRAY.  The  Secretary  of  the  Treasury,  in  his  letter  of 
February  18,  states  the  amount  up  to  that  date. 

Mr.  DANIEL.  Will  the  Senator  from  Maryland  allow  me  to 
ask  him  a  question  somewhat  in  extension  of  that  of  the  Senator 
from  Connecticut? 

Mr.  GORMAN.     Certainly. 

Mr.  DANIEL.  How  much  of  the  money  realized  from  the 
sales  of  bonds  has  been  used  for  current  expenses? 

Mr.  GORMAN.  I  will  answer  the  Senator  from  Virginia  with 
great  pleasure.  In  the  reply  of  the  Secretary  of  the  Treasury, 
which  I  said  was  so  involved  that  it  would  take  an  accountant  to 
understand  it,  he  says  what  I  will  read,  so  that  there  shall  be  no 
mistake  about  it.  On  page  4  of  the  communication,  if  the  Senator 
will  refer  to  Executive  Document  No.  73,  he  will  see  that  the  Sec- 
retary says,  in  answer  to  the  resolution  of  int^uiry  of  the  Senate 
as  to  the  balance  of  cash  in  the  Treasury  on  December  31,  1894, 
that  is,  last  December,  the  balance  of  cash  in  the  Treasury  on 
December  31,  1894,  available  for  the  current  expenses  of  the  Gov- 
ernment, but  not  including  the  gold  reserve  fund,  was  $106,375,- 
740.55. 

This  is  the  statement  of  the  Secretary  of  the  Treasury  to  the 
Senate  of  the  actual  amount  of  money  on  hand,  which  included 
everything — ordinary  receipts  and  the  amount  of  greenbacks  that 
he  had  redeemed  in  gold — placed  in  that  fund. 

This  statement  is  misleading.  It  is  not  true  to  the  extent  that 
against  that  were  thirty-odd  million  dollars  in  the  shape  of  checks 
and  drafts  which  had  gone  out  and  were  in  the  hands  of  paymas- 
ters and  others.    So  the  actual  balance  which  the  Secretary  had 


9 

on  that  day  available  for  all  classes  of  expenditures,  as  shown  in 
his  statement  to  me  later,  was  $67,093,134.99.  On  the  1st  day  of 
January  of  this  year  we  had  only  $67,093,134.99  in  the  Treasury 
available 

Mr.  CAREY.     Including  gold? 

Mr.  GrORMAN.  No,  sir;  exclusive  of  gold,  available  for  cur- 
rent exjienses  to  meet  appropriations  by  Congress,  including  every- 
thing he  had  in  the  Treasury  except  the  amount  of  gold  that  was 
there  to  redeem  greenbacks. 

Mr.  GRAY.  May  I  ask  the  Senator  from  Maryland  where  he 
finds  the  deduction  on  account  of  checks  in  the  hands  of  disburs- 
ing agents  that  is  to  be  taken  from  the  balance  of  $106,375,000, 
which  the  Secretary  of  the  Treasury  gives  as  the  cash  balance  on 
December  31,  1894? 

Mr.  GORMAN.  If  the  Senator  from  Delaware  will  send  for 
the  statement  of  the  Secretary  of  the  Treasury  made  on  the  first 
day  of  every  month,  if  he  has  it  not  befoi'e  him,  he  will  find  the 
exact  amount.  I  will  hand  the  Senator  the  statement,  if  he  has 
not  one. 

Mr.  GRAY.  But  how  does  that  qualify  the  statement  made  by 
the  Secretary  of  the  Treasury  that  on  December  31, 1894,  that  was 
the  actual  cash  balance? 

Mr.  GORMAN.  I  am  trying  to  explain  to  the  Senator  that  the 
statement  was  made  up  by  some  official  in  the  Department,  show- 
ing the  exact  amount  the  Treasury  had  on  hand  without  taking 
into  account  the  checks  and  the  drafts  that  had  been  given  and 
were  outstanding.  Therefore  it  is  misleading.  The  statement  of 
the  Secretary  of  the  Treasury,  which  was  made  on  the  1st  day  of 
January  of  this  year,  j^ves  the  correct,  the  exact  amount. 

Mr.  GRAY.     That  is  what  I  want  to  get. 

Mr.  GORMAN.  As  soon  as  I  discovered  this  statement  in  the 
report  to  the  Senate  I  went  to  the  Treasury  Department  and  said, 
"  This  statement  is  misleading;  it  is  not  accurate,  or  else  your 
regular  statement  made  on  the  Ist  day  of  January  is  incorrect." 
"When  they  went  to  the  books  and  went  over  them  they  said,  "  Cer- 
tainly ;  the  correct  bala,nce  is  $67,093,184.99  and  not  $106,375,740.55, 
as  reported  to  the  Senate." 

Mr.  GRAY.     That  is  the  statement  I  wish  to  see. 

Mr.  GORMAN.  I  will  send  and  get  one  for  the  Senator  if  he 
desires  it.     It  is  the  statement  of  December  31. 

Mr.  STEWART.  I  should  like  to  call  attention  to  the  state- 
ment of  February  18, 1895,  wherein  the  Secretary  of  the  Treasury 
says  he  has  a  cash  balance  of  $99,875,284.32,  exclusive  of  $55,101,- 
704.63  of  gold  reserve. 

Mr.  GORMAN.  That  is  the  statement  to  which  I  referred  a 
few  moments  since.  Will  the  Senator  permit  me  to  go  on  with 
the  monthly  and  yearly  statements?  I  will  come  later  to  what  he 
refers  to.  I  will  read  first  the  figures,  so  that  the  Senator  from 
Delaware  can  ascertain  them  for  himself.  On  the  first  day  of  each 
month  the  Secretary  of  the  Treasury  makes  an  actual  statement 
from  the  books  of  the  Treasury,  and  he  reported  there  that  the 
net  cash  on  hand  was  $67,093,134.99.  That  is  the  actual  money  on 
hand  available  for  ordinary  expenditures.  His  subordinates — 
some  of  the  new  ones,  I  do  not  know  who — in  answering  the  reso- 
lution of  the  Senate  failed  to  deduct  from  that  the  checks  that  had 
already  been  passed  away  or  given  out.  That  was  misleading. 
1904 


10 

Tliere  is  no  hesitation  on  the  i^art  of  the  Secretary  of  the  Treas- 
nry.  and  no  question  that  instead  of  its  being  $106,000,000  it  is  $07,- 
OOU.OOO.  The  Senator  can  look  over  the  stateiuenis  if  he  desires. 
There  is  no  question  about  it.  Nobody  dovabts  it.  That  is  a  dif- 
ference of  thirty-odd  million  dollars,  to  begin  with. 

But  the  Secretary  of  the  Treasury  estimates  that  the  revenue 
from  now  out  will  be  sufficient  to  meet  the  ordinary  disburse- 
ments, provided  he  uses  the  balance  in  the  Treasuiy  that  he  has 
received  in  the  shape  of  greenbacks  for  which  he  has  paid  gold. 
In  that  I  think  he  is  mistaken.  We  do  not  believe  that  if  we  per- 
mit him  to  use  every  dollar  in  the  Treasury  so  received,  giving 
the  most  liberal  estimate  for  all  the  possible  revenue  from  now 
until  July,  IHOo,  he  will  have  enough  money  to  meet  the  cvirrent 
expenses  of  the  Government  by  $00,000,000,  taking  into  account 
the  amount  that  is  diie  on  account  of  former  appropriations,  a 
part  of  which  must  be  paid.  The  Secretary  of  the  Treasury  has 
great  power  in  the  way  of  suspending  payment  on  any  account 
■which  has  been  appropriated  for  by  Congress. 

Up  to  this  date  the  balance  unexpended,  other  than  the  sinking 
fund,  is  about  .$103. 44'.). 201. 59  that  has  been  appropriated  by  Con- 
gi-ess,  and  to  the  sinking  fund  $1.50,506, 838. 8o,  making  a  total  of 
$255,955,039.94,  which  is  available  for  expenditure. 

But.  deducting  the  sinking  fund,  there  is  over  $100,000,000  owing 
now  for  i)ublic  buildings,  for  rivers  and  harljors,  on  account  of 
the  Navy,  and  on  account  of  the  other  appropriations  made.  As 
a  matter  of  course  if  you  will  suspend  payment,  refuse  to  pay 
your  debts,  paralyze  all  these  enterprises  and  works  which  Con- 
gress has  determined  are  necessary,  there  maybe  a  forced bahmce 
in  the  Treasury  in  1896.  But  it  will  be  simjtly  by  piling  up  your 
debt  obligations  to  the  extent  of  sixty  or  eighty  million  dollars 
more. 

The  Secretary  of  the  Treasury  has  estimated — I  Avill  give  his 
figures,  becaiise  I  received  them  from  the  Department  (the  Sena- 
tor from  ISIissouri'  [I\Ir.  Vest]  has  stated  what  he  understood  to 
be  the  case,  which  turned  out  to  be  accurate,  and  the  Senator's 
statement  was  accurate  as  to  what  the  Secretary  said) — that  for 
this  calendar  year,  with  which  we  are  dealing  now,  he  woiald 
receive  in  revenues  from  customs  $174,000,000  (I  do  not  give  the 
odd  figui-es) ,  f rom  internal  revenue  $190,000,000,  and  from  miscel- 
laneous receipts  $15,000,000;  that  his  whole  receipts  during  the 
year  would  be  $380,610,543.  That  is,  from  last  January  to  next 
January.  He  estimated  that  his  expenditures  during  the  same 
period  would  be  $358,000,000.  That  is  the  full  estimate;  all  they 
can  guess  will  be  received.  The  question  is  whether  that  is  a  fair 
estimate  of  his  receipts.     If  it  is,  then  that  item  would  be  correct. 

The  estimate  of  the  Secretary  is  as  follows: 

Treasury  Department,  Februar]/  SI,  1895. 

Sir:  In  reply  to  your  communication  of  the  19th  instant  I  have  the  honor 
to  state  that  the  items  of  estimated  revenue  and  expenditure  during  the 
calendar  year  beginning  January  1, 1895,  and  ending  December  31, 1895,  both 
inclusive,  are  as  follows: 
Revenue- 
Customs $174,33.5,670 

Internal  revenue 190,  S-iO,  Ji:iO 

Miscellaneous 15,435,653 

Total "380,610,543 

1904 


11 

Expenditiares— 

Civil  and  miscellaneous $90,6P7,520 

War 53,075,000 

Navy 32,930,000 

Indians 11,805,000 

Pensions 139,540,000 

Interest 31,000,000 

Total 358,047,520 

This  is  the  estimate  upon  which  the  Secretary's  response  to  Senate  resolu- 
tion of  January  38,  1895,  was  based. 
Respectfully,  yours, 

J.  G.  CARLISLE,  Sea-etary. 
Hon.  A.  P.  Gorman, 

United  States  Senate. 

If  any  Senator  will  take  up  the  receipts  in  the  last  three  years 
and  will  average  the  recei]>ts  per  month  he  will  find  that  that  es- 
timate of  receipts  is  $25,000,000  greater  for  the  whole  year  than  it 
has  averaged  in  the  months  we  have  already  passed.  There  is 
some  reason  to  believe  that  the  revenues  will  increase,  that  there 
will  be  a  very  considerable  increase  after  July  and  until  Decem- 
ber 31.  But  it  is  not  safe  to  estimate  such  a  decided  increase  as 
the  Secretary  hopes  to  have. 

But  take  it  on  the  other  hand.  He  says  the  expenditures  will 
be  §358,000,000.  Let  us  see  what  the  expenditures  actually  are 
and  what  is  appropriated  for.  Now,  remember  that  the  Secre- 
tary's estimates  for  expenditures  are  only  $358,000,000.  The  ap- 
propriations for  the  fiscal  year  from  July,  1891,  to  July,  1893,  were 
$385,736,308.71  and  the  permanent  appropriations  were  $121,863,- 
880;  making  thewhole  appropriation  for  that  year $507,600,188.71. 
A  part  of  the  permanent  appropriation  is  the  sinking  fund,  which 
they  can  ignore,  that  is  about  $49,000,000,  making  the  amount  to 
be  provided  for  about  $460,000,000.  For  the  fiscal  j^ear  of  1894  and 
1895  the  total  appropriations  were  $492,230,685.03. 

Now  I  come  to  this  year's  appropriations,  which  we  are  making 
now  for  the  fiscal  year  beginning  July.  1895,  and  ending  June  30, 
1896.  The  bills  which  have  passed  the  other  House  already  amount 
to  $374,170,111.51.  Add  to  this  amount  the  increases  we  must 
make  and  the  permanent  appropriations,  and  they  will  be  about 
$490,000,000. 

I  will  insert  in  this  connection  a  statement  of  the  appropriations 
for  several  years  past  and  an  estimate  as  to  the  appropriations  for 
the  approaching  fiscal  year: 

Appropriations  for  the  fiscal  year  ISO  1  and  1S92. 

Regular  approi^riations $385,736,308.71 

Permanent  appropriations.- 121,803,880.00 

Total 507,600,188.71 

Appropriations  for  the  fiscal  year  1S9U  and  1S95. 

Regular  appropriations S'^W,  15ti,  005. 03 

Permanent  appropriations - - 101,074,080.00 

Total -- 492,230,085.03 

Appropriations  for  the  fiscal  year  1895  and  1S90. 

The  bills  that  have  passed  the  House  of  Representatives  so  far, 
not  including  miscellaneous  appropriations,  but  only  the  reg-  ,~n  m 

ular  appropriations,  amount  to - P<4, 1(0, 111.51 

It  is  perfectly  safe  to  say  that  the  additions  in  the  Senate  that     ^,  ^„  _.  „ 
have  been  and  will  be  made  will  exceed 30,000,000.00 

1904 


12 

Makins;  the  total  appropriations  by  the  regular  appropriation 

bills  at  this  session  about $390,000,000.00 

Add  the  permaiiout  appropriations  for  this  fiscal  year 113,073,956.00 

And  the  total  will  be  about 5(JO,0()0,000.00 

Which  includes  the  sinking  fund,  of  about 49,000,000.00 

Deduct  the  sinking  fund  and  the  amount  to  be  provided  for  is, 

in  round  numbers 4")0, 000, 000. 00 

As  against  the  Secretary's  estimate  of 35.8.047,530.00 

Or  a  difference  of  about 91, 00<J.  000. 00 

Mr.  President,  if  the  Secretarj'  of  the  Treasury,  in  the  light  of 
what  is  being  passed  liere  now,  were  to  revise  that  estimate,  he 
would  have  to  admit  that  the  figures  which  I  have  given  are  cor- 
rect. The  truth  is — and  I  have  the  highest  regard  for  the  Secre- 
tary of  the  Treasury — one  year  ago  he  made  an  estimate  (or  his 
subordinates  made  one  to  which  he  agreed)  of  the  revenues  and 
the  exx)enditures  of  the  Government,  and  he  made  a  mistake  on 
the  wrong  side  of  about  $60,000,000.  The  Treasury  officials  have 
been  adhering  to  that  mistake  in  all  ofiicial  communications  which 
have  been  made,  when  the  fact  stares  them  in  the  face  that  day  by 
day,  as  the  daily  report  shows,  they  are  running  behind  in  receipts 
and  that  the  payments  exceed  his  estimate.  That  the  receipts  will 
increase  when  business  resumes  its  normal  condition  I  believe  as 
firmly  as  does  the  Senator  from  Indiana  [Mr.  Voorhees]  ,  who 
reported  the  revenue  bill  last  session.  I  believe  the  revenue  act 
will  give  a  surplus  of  from  forty  to  fifty  million  dollars  per  annum 
tinder  normal  conditions  of  trade,  but  it  can  not  do  it  in  this 
year;  it  will  not  do  it  in  the  first  six  months  or  the  next  year. 
There  is  the  deficiency.  It  stares  you  in  the  face  with  $100,000,000 
appropriated  prior  to  the  year  1895  that  has  not  been  paid,  and 
with  the  proceeds  of  bonds  sold  to  pay  current  expenditures. 

I  appeal  to  Senators  whether  it  is  wise  or  patriotic  for  us  to  per- 
mit Congress  to  adjourn  \vithout  making  some  provision  which 
will  meet  this  deficiency,  which  will  make  it  impolitic,  unwise, 
yea,  Mr.  President,  impossible,  for  any  executive  officer  to  sell 
ten  or  thirty  year  bonds  and  to  continue  to  pay  current  expenses 
from  the  proceeds  of  such  sales  of  bonds. 

Mr.  GEORGtE.  Will  the  Senator  allow  me  to  ask  him  a  ques- 
tion? 

Mr.  GORMAN.     Certainly. 

Mr.  GEORGE.  What  is  the  objection  to  requiring  the  Secretary 
of  the  TreasTiry  to  coin  the  seigniorage  in  the  Treasury? 

Mr.  GORMAN.  I  have  just  said — I  think  the  Senator  was  not 
present — that  I  trust  we  would  be  able  to  settle  this  question  purely 
of  deficiency  in  the  Treasury,  and  I  appealed,  as  far  as  I  could,  to 
every  Senator  to  abandon  for  the  time  being  all  the  theories  and 
ideas  as  to  the  character  and  kind  of  currency,  but  simply  to  pro- 
vide a  cei-tificate  that  shall  be  redeemable  within  two  years  at  the 
option  of  the  Government,  being  the  only  thing  we  can  do  in  these 
expiring  hours  of  Congress  so  as  to  prevent  the  sale  of  gold  bonds 
hereafter.     That  is  the  point. 

Mr.  GEORGE.  It  seems  to  me  to  be  very  bad  economy  to  bor- 
row money  when  we  have  it  already  in  the  Treasury  if  we  would 
just  coin  it. 

Mr.  GORMAN.  O,  the  Senator  knows  that  would  open  up 
the  whole  question  of  silver  and  gold.  Now,  what  would  be  the 
result  if  this  proposition  should  be  adopted?    I  have  in  my  hand, 

1904 


13 


which  I  will  publish  in  full  in  the  Record,  a  statement  from  the 
Treasurer  of  the  United  States,  showing  the  exact  operation  of 
this  matter  of  the  sale  of  bonds  and  how  the  plan  now  proposed 
would  have  saved  any  necessity  for  the  last  issue  of  bonds. 

Treasury  Department,  Office  of  the  Treasuriib, 

Washington,  D.  C,  February  25, 1895. 
Sir:  In  compliance  with  your  oral  request,  I  have  the  honor  to  submit  the 
following  statement  of  the  receipts  and  disbursements  of  gold  and  United 
States  notes  and  Treasury  notes  from  July  1, 1893,  to  December  31, 1894.  For 
convenience  of  comparison  with  statements  previously  furnished  the  time  ia 
divided  into  periods  of  six  months: 


Gold. 


Notes. 


Onhand  July  1,1892 , 

Received  during  6  months  ending  Dec.  31, 1893: 

For  gold 

For  notes , 

For  other  money 

From  surplus  revenues 

During  6  months  ending  June  30, 1893: 

For  gold - , 

For  notes 

During  6  months  ending  Dec.  31, 1893: 
For  gold 

During  6  months  ending  June  30, 1894: 

For  gold , 

For  notes 

From  sale  of  bonds 

During  6  months  ending  Dec.  31, 1894: 

For  gold , 

For  notes 

Prom  sale  of  bonds 


Total. 


Paid  out  during  6  months  ending  Dec.  31, 1893: 

For  gold 

For  notes 

During  6  months  ending  June  30, 1893: 

For  gold 

For  notes 

For  other  money 

For  expenses 

During  6  months  ending  Dec.  31, 1893: 

For  notes - 

For  other  money 

For  expenses 

During  6  months  ending  June  30, 1894: 

For  gold 

For  notes 

For  other  money 

For  expenses 

During  6  months  ending  Dec.  31,1894: 

For  gold 

For  notes 

For  expenses 


Total 


On  hand  Dec.  31, 1894 . 


1901 


$114,343,366 


28,341,348 
4,509,861 
5,071,288 


45,320,895 


4, 708, 744 
58,660,684 


25,008,933 
58,719,598 


344,683,707 


30,998,301 


71,102,144 


5,454,146 
'9,"i39^667 


79,388,004 


63,357,100 


358,439,362 


86,244,445 


$8,696,590 
30,998,201 


71,103,144 


5.454,146 

79,388,004 


62,357,100 


357,996,185 


28,341,348 


45,330,895 


6,873,539 
9,863,387 


1,550,188 
18,013,738 

4,708.744 


11,497.244 
33,775,049 

35,008,923 


10,760,123 


194,713,077 


63,384,108 


14 


Summarized,  this  statement  shows  the  following  net  results: 

Gold. 

Notes. 

On  hand  July  1, 1893 

$114,342,366 

S8, 696, 590 

Received— 

For  gold       

349, 299, 595 

163,379,916 

4,.5l)ll,Stil 

5,0-l,2SH 

117,380,283 

Total 

344,683,707 

357,996,185 

Paid  out — 

For  gold  

103, 379, 910 

349,299,595 

19, 919, 971 

For  expenses .-. -- 

9,139,667 

71,413,196 

Total   - 

258,439,362 

194,712,077 

On  hand  Dec.  31. 1894 

86,244,445 

63, 384, 108 

From  the  fore§:oing  it  appeal's  that  out  of  $240,2!(9,595  of  notes  received  for 
gold  the  siiin  of  ,s]!»,'JJ0,ii71  was  aftcrwiu-cls  paid  out  for  other  kinds  of  money 
and  §71,412,l'.lti  was  applied  to  current  exi)ensos.  Of  the  .«;l!t,!il!l,971  of  other 
moneys  .so  acquired,  however,  the  sum  of  S14,.522,.'J14  was  also  i)aid  out  during 
the  six  months  ending  December  81,  1894,  for  current  exiienses.  The  total 
applicjition  of  the  gold  fund  to  expenses  was  therefore  as  follows: 

Coin $9,1.'}9,667 

Redeemed  notes 71,412,196 

Other  moneys  received  for  redeemed  notes 14, 522, 514 

Total 95,074,377 

Hence  the  statement  of  the  recreipts  and  disbursements  on  account  of  the 
gold  fund,  in  the  simplest  form,  is  as  follows: 

On  hand  July  1, 1893 $114,343,366 

Received — 

For  notes  and  other  money 107,889,771 

From  surplus  revenues 5,071,388 

From  sale  of  bonds 117,;380,283 

Total 344,683,707 

Paid  out— 

For  notes  and  other  money 163.364,885 

For  expeu.ses-- 95,074,377 

Total 2.58,439,263 

On  hand  December  31, 1894. 86,2-14,445 

You  will  observe  that  the  receipts  of  $."),07].28S  from  surplus  revenues  were 
confined  to  the  six  months  ending  Deceinlx'i'  21, 1892.  The  S'J5,074,.377  applied 
from  the  gold  fund  to  current  expenses,  (iuriiiir  the  two  years  ending  Decem 
ber  31,  1894,  increased  by  the  sum  of  $9,927,706  so  applied  during  January, 
1895,  makes  a  total  of  $1(J5,002,143  for  the  twenty-five  months,  as  stated  in  the 
first  part  of  the  Secretary  of  the  Treasury's  reply  to  the  Senate  resolution 
dated  January  31, 1895. 
Respectfully  yours, 

D.  N.  MORGAN", 
Treasurer  United  States. 
Hon.  A.  P.  Gorman,  United  States  Senate. 

For  the  two  purchases  of  bonds  that  were  made  prior  to  the  last, 

the  $100,000,000,  for  which  $117,000,000  was  received  into  the 

Treasury,  the  gold  was  all  drawn  out  by  bankers  and^^thers,  who 

presented  greenbacks  or  Treasury  notes  for  redemption.    During 

1904 


15 

the  period  included  in  the  last  twenty-five  months,  when  the 
Treasury  authorities  had  sufficient  money  that  they  could  use  and 
utilize,  they  took  the  same  greenbacks  for  which  the  bankers  and 
others  had  demanded  gold,  went  out  into  the  open  market,  pre- 
sented them,  and  received  gold  for  them  to  the  amount  of  $107,- 
000,000.  It  is  a  perfect  demonstration  that  if  they  had  had  in 
the  last  twenty-five  months  a  surplus  of  money  in  the  Treasury, 
greenbacks  and  Treasury  notes  and  bank  notes  or  silver  notes, 
•the  credit  of  the  Government  was  so  perfect  that  the  Secretary  of 
the  Treasury  could  have  had  all  the  gold  he  wanted  in  exchange 
for  these  noninterest-bearing  notes.  Nobody  questions  it  who 
looks  at  the  Treasury  statements. 

There  is  not  a  man  who  has  had  years  of  experience  in  the  Treas- 
ury who  does  not  know  that  what  I  now  state  is  true.  There  is 
not  a  man  who  is  familiar  with  the  operations  of  the  Treasury 
who  does  not  know  that  from  the  date  of  resumption  under  the 
distinguished  Senator  fi'om  Ohio  [Mr.  Sherman]  the  credit  of  the 
Government  has  been  so  good,  the  knowledge  of  the  people  so  per- 
fect that  every  obligation  would  be  redeemed  in  money  of  equal 
value  with  that  of  any  other,  that  you  could  go  and  get  gold  for 
Treasury  notes. 

Mr.  President,  just  prior  to  the  first  Administration  of  President 
Cleveland  the  public  became  somewhat  alarmed,  as  they  have  been 
in  the  last  six  months.  A  run  was  made  upon  the  Treasury  for 
gold,  and  the  then  Secretary  of  the  Treasury,  a  very  gi'eat  man, 
Mr.  McCulloch,  became  alaritied,  as  others  since  have  become 
nervoiis.  He  thought  we  were  going  upon  a  silver  basis,  that  his 
gold  was  disappearing.  I  read  a  telegram  in  the  Senate  nearly 
eight  years  ago  from  that  distinguished  Secretary  to  the  sub- 
treasurer  in  New  York,  stating  that  we  would  be  upon  a  silver 
basis  in  thirty  days. 

But  President  Cleveland  came  into  power,  and  he  had  a  grand, 
courageous  man  for  Secretary  of  the  Treasury.  He  had  in  the 
Treasury  over  $200,000,000  of  greenbacks  and  Treasury  notes; 
and  what  did  he  do?  Be  went  over  to  New  York  and  said  to  the 
men  who  had  made  a  corner  against  the  Treasury  gold,  as  they 
made  it  recently,  "You  may  precipitate  a  panic.  The  Govern- 
ment is  strong;  the  Government  can  stand  a  panic;  but  you  will 
have  the  panic  if  you  continue  to  embarrass  the  Government,  as 
you  have  done."  He  had  greenbacks,  he  had  Treasury  notes,  and 
he  had  silver  dollars  which  he  could  use  for  the  purpose  of  teach- 
ing them  a  lesson.  He  said,  "Here  are  $20,000,000  in  round  silver 
dollars,  not  certificates.  Give  me  your  gold  for  it  and  stop  this 
raid  upon  the  Treasury,  or  else  you  shall  have  the  panic."  And 
they  agreed  to  give  him  $20,000,000  of  gold  for  the  $20,000,000  of 
silver.  The  transaction  was  not  completed,  beeause  there  was  no 
necessity  for  it;  gold  came  rolling  back  into  the  Treasury,  and  the 
panic  was  passed. 

Mr.  GEORGE.    Why  not  treat  them  the  same  way  now? 

Mr.  GORMAN.  Ah,  Mr.  President,  the  Senator  must  not  put 
such  a  question  to  me. 

Mr.  GEORGE.     Why? 

Mr.  GORMAN.    I  am  dealing  with  the  condition  as  it  stands 

now.    You  have  no  money  in  your  Treasury  as  you  had  then,  and 

that  is  the  point  of  my  remarks.     Secretary  Carlisle  came  into  the 

Department  stripped  of  the  power  to  do  as  Secretary  Manning  had 

1901 


IG 

done.  1  know  from  my  own  personal  laiowledge  that  he  tried  to 
do  it;  that  he  proclaiTued  to  the  world  he  intended  to  do  it.  His 
desire  was  in  that  direction:  but  when  he  came  to  look  at  his 
coffers  he  found  he  was  unlike  Mr.  Manning;  tnat  he  had  no  bal- 
ance to  pay  his  current  debts  with.  He  was  helpless.  I  want  to 
relieve  him.  I  appeal  to  the  Senator  from  Mississippi  now  to 
give  him  this  authority  to  the  extent  of  §100,000,000,  so  that  he 
may  say  to  them  from  now,  henceforth,  "You  can  not  embarrass 
the  Government.  Our  credit  is  perfect.  "We  have  the  money  that 
the  people  will  take.  We  have  the  right  to  issue  certificates  of 
$20  and  up  to  $500,  which  any  patriotic  citizen  will  take.  I  am 
master  of  the  situation.  The  Government  of  the  United  States 
shall  not  be  at  the  mercy  of  a  few  powerful  banks." 

Mr.  GEORGE.  I  understand  the  Secretary  of  the  Treasury 
does  not  want  any  of  these  certificates;  that  he  has  plenty  of 
money.  That  is  his  statement.  The  Senator  from  Maryland 
seems  to  treat  the  Secretary  of  the  Treasury  as  a  sort  of  a  ward,  as 
though  we  are  his  guardians  here  to  take  care  of  him.  I  under- 
stand the  Secretary  says  he  has  money  enough. 

Mr.  GORMAN.  Mr.  President,  I  do  not  understand  the  Secre- 
tary to  say  so,  and  I  challenge  the  Senator  from  Mississippi  or 
any  other  Senator  to  produce  the  evidence  that  he  has  ever  said 
so.    It  is  not  in  existence,  so  far  as  I  know. 

Mr.  President,  I  am  not  the  guardian  of  the  Secretary  of  the 
Treasury,  but  as  a  Senator  on  this  floor  I  am  the  servant  of  a  por- 
tion of  the  people  of  the  United  States.  I  represent  a  people  who 
would  not  permit  me  to  remain  here  if  I  did  not  advocate  the  pay- 
ment of  every  just  obligation  of  the  Government.  I  stand  here, 
Mr.  President,  to  do  what  I  think  to  be  right  to  maintain  the  in- 
tegrity of  the  Government  in  every  way  and  to  prevent  the  sale  of 
bonds  running  for  a  long  term  of  years. 

Mr.  VOORHEES.  I  know  the  Senator  from  Maryland  does  not 
intend  to  do  anybody  an  iniustice. 

Mr.  GORMAN.     No ;  I  would  not. 

Mr.  VOORHEES.     Certainly  not  the  Secretary  of  the  Treasury. 

Mr,  GORMAN,     O,  no  ;  certainly  not. 

Mr.  VOORHEES.  I  think  it  proper  and  right  in  this  connection 
in  his  remarks  to  have  stated  what  the  Secretary  of  the  Treasury 
has  said  on  this  subject.  In  a  communication  to  the  Finance 
Committee  he  stated  that  he  thought,  as  he  has  heretofore  said, 
he  ought  to  have  the  general  authority  to  issue  Government  se- 
curities to  aid  the  Treasury  in  case  of  a  deficiency,  but  that  he 
would  not  exercise  the  power  now  if  given  to  him,  because  he 
said  it  was  not  necessary. 

Mr.  VILAS.  Will  the  Senator  from  Indiana  permit  me  to  call 
attention  to  the  exact  langiiage  in  the  communication  of  the  Sec- 
retary of  the  Treasury  to  the  President  of  the  Senate  under  date 
of  the  18th  of  February? 

Mr.  VOORHEES.     Certainly, 

Mr,  VILAS.  After  stating  that  there  was  in  the  Treasury  on 
the  18th  of  February,  exclusive  of  the  $55,000,000  gold  reserve, 
nearly  $100,000,000,  "as  shown  by  the  inclosed  statement,"  the  Sec- 
retary of  the  Treasury  says: 

It  is  my  opinion  that  the  Secretary  of  the  Treasury  ought  to  be  perma- 
nently invested  with  authority  to  issue  and  sell  short-time  bonds  or  otner  ob- 
ligations of  the  Government  for  the  purpose  of  raising  money  to  meet  such 
deficiencies  in  the  ordinary  revenues  as  may  occur  from  time  to  time;  but  I 
1901 


17 

do  not  think  that  there  is  any  necessity  at  the  present  time  for  the  exercise 
of  such  authority  if  it  existed.  It  is  not  probable  that  such  deficiencies  will 
occur  during  the  remainder  of  the  current  fiscal  year  as  will  exceed  the  avail- 
able balance  now  on  hand,  and  it  is  estimated  that  during  the  next  fiscal  year 
the  receipts  will  exceed  the  expenditures. 

Mr.  VOORHEES.  I  am  very  much  obliged  to  the  Senator  from 
Wisconsin.     That  is  the  communication  I  referred  to. 

Mr.  CULLOM.  If  the  chairman  of  the  Committee  on  Finance 
has  an  official  letter  from  the  Secretary  of  the  Treasury  stating 
exactly  what  the  condition  of  the  Treasury  is  and  what  he  wants, 
I  should  like  to  have  it  put  in  the  Record. 

Mr.  GRAY.     That  is  tlie  letter  referred  to. 

Mr.  VOORHEES.  The  Senator  from  Wisconsin  has  read  the 
letter  from  the  Secretary  of  the  Treasury  to  which  I  alluded. 

Mr.  CULLOM.  The  Senator  from  Wisconsin  read  only  an  ex- 
tract from  it,  I  understand. 

Mr.  VILAS.     I  read  substantially  all  of  it. 

Mr.  VOORHEES.  It  is  not  a  long  letter.  I  want  to  supple- 
ment that  statement  by  simply  observing,  what  we  all  remember, 
that  the  President  of  the  United  States  has  assured  us  that  he  has 
a  comfortable  surplus  on  hand  and  he  was  not  clamoring  for  such 
legislation  as  this. 

Mr.  GEORGE.     ' '  Comfortable  "  there  meant  ' '  plenty. " 

Mr.  VOORHEES.     "Plenty." 

Mr.  GORMAN.  The  Senator  from  Indiana  and  the  Senator 
from  Wisconsin  will  please  take  note  of  the  fact  that  the  Secretary 
says:  '•  It  is  my  opinion  that  the  Secretary  of  the  Treasury  oiight 
to  be  permanently  invested  with  authority  to  issue  and  sell  short- 
time  bonds  or  other  obligations  of  the  Government  for  the  pur- 
pose of  raising  money  to  meet  such  deficiencies  in  the  ordinary 
reveniies  as  may  occur  from  time  to  time."  'There  is  an  express 
declaration  that  a  provision  such  as  we  propose  is  wise  and  ought 
to  be  granted.  There  can  be  no  question  as  to  the  correctness  of 
that  opinion. 

It  Is  true  that  the  Secretary  further  adds,  "  But  I  do  not  think 
there  is  any  necessity  at  the  present  time  for  the  exercise  of  such 
authority,  if  it  existed."  That  may  be,  Mr.  President,  but  the 
Senators  who  are  pressing  this  proposition  must  remember  that 
with  all  the  deficiencies  that  have  occurred  in  the  revenues, 
amounting  already  to  over  $100,000,000.  neither  the  President  nor 
the  Secretary  has  ever  called  the  attention  of  Congress  to  such  de- 
ficiency and  asked  for  such  relief  as  now  proposed.  This  is  the 
first  communication  from  the  Secretary  of  the  Treasury,  brought 
out,  it  is  triie,  in  reply  to  a  resolution  of  the  Senate,  in  which  he 
suggests  short-time  bonds  instead  of  the  use  and  sale  of  teii  and 
thirty  year  bonds.  And  the  authority  ought  to  be  given  to  him, 
and  I  am  amazed  that  Senators  oppose  it  on  the  ground  that  the 
Secretarv  does  not  desire  the  enactment. 

Mr.  STEWART.  I  also  call  the  attention  of  the  Senator  from 
Maryland  to  the  fact  that  the  $100,000,000,  in  roimd  numbers, 
was  exclusive,  the  Secretary  states,  of  the  $55,000,000  then  in  the 
Treasury,  but  under  the  sale  of  bonds,  the  President  tells  us,  and 
we  know  it  to  be  a  fact,  that  enough  money  will  come  in  on  the 
bonds  already  sold  to  make  the  reserve  over  $100,000,000;  and  then 
he  will  have  $100,000,000  of  available  funds  for  current  expenses 
and  $100,000,000  in  the  Treasury. 
1904 — 3 


18 

Mr.  CAREY.  The  Senator  from  Mar5-lan(l  is  familiar  with  the 
reply  of  February  18  made  by  the  Se('retary  of  the  Treasury  to 
the  inijiiiry  of  the  Senate.  He  .states  that  there  were  $99,1100,000 
in  the  Treasury  exclusive  of  the  gold  reserve.  Will  the  Senator 
state,  if  he  knows,  what  amount  of  checks  and  certificates  are  out 
against  the  S'jy.OOU.OOO? 

Mr.  GORMAN.  I  am  dealing  with  the  statements  by  calendar 
years  and  for  the  six  months  from  July  1  to  December  81,  1894. 
I  am  not  unaware  of  the  letter  of  the  Secretary  of  the  Treasury, 
which  the  Senator  from  Wisconsin  read,  nor  am  I  unmindful  of 
the  statement  of  the  President  of  the  United  States  in  his  recent 
message  communicated  to  the  Senate  of  the  United  States,  which 
is  Executive  Document  No.  257  of  the  present  session,  dated  Jan- 
uary 28,  1895, 

There  need  be  no  fear- 
Says  the  President — 
that  we  can  not  pay  our  current  expenses  with  such  money  as  we  have. 
Now  mark  it,  "  with  such  money  as  we  have." 

There  is  now  in  the  Treasury  a  comfortable  surplus  of  more  than  Sl>5,0CK),000, 
but  it  is  not  in  gold,  and  therefore  does  not  meet  our  dithculty. 

But  every  dollar  of  it  was  a  part  of  the  proceeds  of  the  sale  of 
the  bonds.  The  Treasury  notes  were  presented  and  redeemed  in 
gold,  and  hLs  entire  balance  was  from  the  sale  of  bonds.  Not  in 
gold.  No,  Mr.  President.  The  act  of  1875  that  authorized  the 
issue  of  these  bonds  provided  for  keeping  up  the  gold  reserve 
alone.  It  was  intended  for  the  purpose  of  keeping  up  the  gold  re- 
serve alone;  but  it  was  afterwards  construed,  and  stated  by  the 
Secretary  frankly,  that  after  he  had  thus  bought  his  gold  and  I 
took  my  greenbacks  tliere  and  presented  them  he  gave  me  the  gold 
back  for  them  and  then  put  my  greenbacks  into  his  general  re- 
ceipts.    That  never  was  in  contemplation. 

Now,  I  am  not  criticising  the  President  or  the  Secretary  of  the 
Treasury.  On  the  contrary,  I  have  said  over  and  over  again,  and 
I  desire  "to  repeat  it,  that  under  the  circumstances  there  was  noth- 
ing else  for  them  to  do.  The  credit  of  the  Government  had  to  be 
maintained.  What  I  do  say  is  that  Congress,  in  my  judgment, 
would  be  recreant  to  the  duty  they  pwe  the  people  of  the  country 
if  they  did  not  give  the  President  and  the  Secretary  of  the  Treas- 
ury power  to  issue  certificates  of  two  years,  bearing  8  per  cent 
interest,  to  let  the  Secretary  of  the  Treasury  meet  any  emergency 
of  the  Treasury  Department.  We  do  not  direct  him  to  dispose  of 
them.  I  have  that  confidence  in  every  President  and  every  Secre- 
tary which  leads  me  to  believe  that  they  would  not  abuse  a  trust 
of  this  sort  and  dispose  of  them  if  it  were  not  necessary,  but  we 
ought  to  give  the  power  to  them. 

Then,  Mr.  President,  we  ought  to  say  to  them,  and  I  will,  so  far  as 
I  can,  publicly  and  privately,  that  "  Having  given  you  this  power 
there  will  be  no  necessity  for  you  to  sell  thirty-year  bonds  here- 
after, and  the  people  of  tlie  country  will  not  sustain  you  if  you  do 
it."  But  if  Congress  fails  to  give  this  power,  then,  as  the  President 
has  said  to  you,  he  will  continue  the  sale  of  bonds.  Who  can  com- 
plain of  him  hereafter  if  there  is  a  failure  here  and  now?  Sena- 
tors who  are  on  more  intimate  terms  than  I  am  and  may  know 
more  of  the  personal  views  of  the  Executive  may  have  some  inti- 
1904 


19 

mation  that  this  is  distasteful  to  the  Administration.  That  would 
not  control  me,  because  my  view  is  that  I  must  represent  the  in- 
terests of  the  people  of  the  country  as  I  understand  them.  I  would 
not  desire  to  force  upon  a  coordinate  branch  any  power  that  they 
■did  not  want,  unless  in  my  judgment  it  was  absolutely  necessary 
to  protect  the  taxpayer.  I  can  not,  with  my  view,  permit  the 
session  to  close  without  making  the  effort  to  give  some  such  power 
as  will  save  a  repetition  of  the  transactions  of  the  past.  I  refer  to 
to  all  three  sales  of  long-year  bonds. 

Now,  Mr.  President 

Mr.  GRAY.  Before  the  Senator  leaves  the  general  discussion 
of  the  resources  of  the  Treasury  and  its  present  condition,  which 
is  so  interesting  to  the  people  of  this  country,  will  he  explain  how 
it  is  that  January  1,  189.5,  the  available  cash  balance  was  about 
§67,000.000,  after  making  the  deductions  which  I  admit  ought  to 
be  made,  the  checks  in  the  hands  of  disbursing  agents,  and  that 
February  18,  by  the  statement  of  the  Secretary  of  the  Treasury, 
there  was  an  available  cash  balance,  exclusive  of  gold  reserve,  of 
^99,000,000,  and  there  has  been  about  that  available  cash  balance 
from  that  day  to  this? 

Mr.  GORMAN.     Yes;  I  can  explain  it  to  the  Senator. 

Mr.  GRAY.  How  can  the  Senator  explain  it  except  by  the  im- 
proving condition  of  the  Treasury? 

Mr.  GORMAN.  Not  at  all.  I  can  explain  it  to  the  Senator,  and 
when  he  reads  the  Record  he  will  find  the  figures  all  here  from 
the  Treasurer  of  the  United  States.  There  was  some  small  in- 
•crease  in  the  current  revenue,  which  I  say  is  going  on  to  increase 
under  the  present  law,  but  not  enough  to  meet  the  wants  until  a 
year  hence  in  my  judgment.  But  the  difference  in  the  cash  that 
he  names  there  is  just  the  precise  point  I  have  stated.  They  came 
down  here  and  bought  5  per  cent  bonds  and  paid  gold  for  them. 
Then  when  they  were  about  to  induce  another  sale  of  bonds  they 
came  in  with  greenbacks  and  drew  the  gold  out,  drawing  out 
$70,000,000  within  two  or  three  months.  They  handed  the  Secre- 
tary of  the  Treasury  greenbacks,  and  he  turned  it  over  to  the  other 
side  of  the  counter  and  counted  it  so  much  cash  in  the  Treasury. 

Mr.  GRAY.  From  an  analysis  of  the  figures  given  on  the  back 
of  the  letter  of  February  18  I  do  not  find  those  figures  sustained. 

Mr.  GORMAN.     Let  me  show  the  Senator. 

Mr.  GRAY.  There  is  undoubtedly  an  increase  in  greenbacks 
by  reason  of  their  having  been  redeemed  in  gold  and  held  by  the 
Secretary  of  the  Treasury  for  current  purposes. 

Mr.  GORMAN.  For  the  six  months  ending  June  30, 1894,  which 
covers  the  period  the  Senator  talks  about,  $79,000,000  of  notes  were 
received  for  gold.  In  the  six  months  ending  December  oO.  1894, 
the  very  period  the  Senator  is  talking  about,  they  brought  in 
$63,337,100  in  greenbacks  or  Treasury  notes  and  took  the  gold  out 
of  the  Treasury;  and  the  Secretary  under  his  rule  turned  it  over 
into  the  cash  book  and  said,  "  I  will  count  this  as  surplus."  That 
is  the  whole  point  in  the  case.  The  Treasury  has  been  maintained. 
It  would  have  represented  $117,000,000  more  of  debt  than  it  has 
but  for  that  gold  transaction. 

At  this  point  I  submit  Treasury  statements  showing  the  con- 
dition of  the  Treasury  from  July  1,  1884,  to  January  1,  1895: 
1901 


20 

Condition  of  the  Treasury  from  July  1,  188k,  to  January  1, 1895. 

Cash  balance  July  1,  1884 $161,390,577.18 

Receipts  to  March  1,  1885 214,732,476.33 

$376,129,053.51 

Ordinary  expenditures,  July  1, 1884,  to  March  1, 

1885 173, 39i),  1%.  29 

Redemption  of  debt,  July  1,  1884,  to  Mflrch  1, 

1885 44,(581,704.64 

218,a80,900.9a 


Balance  March  1,1885.... 158,048.1.52.58 


Cash  in  Treasury  as  per  debt  statement 1.59,356,506.41 


Cash  balance.  March  1,  1885 1.59,  av..  .506. 41 

Receipts  to  July  1,  1885 Mt,  34(1,743.88 

268, 697, 250. 2» 

Ordinary  expenditures,  March  1, 1885,  to  July  1, 

18.S5  .--- -- .'...        7,820,746.31 

Redemption  of  debt,  March  1,  1885,  to  July  1, 

1885 1,302,780.79 

89, 133, 827. 10 


Balance  July  1, 1885 179,573,723.19 


Cash  in  Treasury  as  per  debt  statement 178,602,643.23 


Cash  balance  July  1, 1885 178,602.643.23 

Receipts  fiscal  year  1886 336,439,727.06 

515,ai2,370.29 

Ordinary  expenditures  fiscal  year  1886 242, 483,  i;58.  ,50 

Redemption  of  debt  fiscal  year  1886 44. 54^3, 993. 36 

287, 027, 131. 8(> 

Balance  June  30, 1886 228,015,238.43 


Cash  in  Treasury  as  per  debt  statement 227.265,253.34 


Cash  balance  July  1.1886 227, 2a5, 253. 34 

Receipts  fiscal  year  1887 371,403,277.66 

598,668,531.00 

Ordinary  expenses  fiscal  year  1887 267.  !i;}2, 179. 97 

Redemption  of  debt  fiscal  year  1887 127,918,468.15 

395,850,648.12 


Balance  June  30. 1887 202,817,882. 


Cash  in  Treasury  as  per  debt  statement 206,323,950.21 


Cash  balance  July  1. 1887 206,323,9.50.21 

Receipts  fiscal  year  1888 379.2(36.074.76 

— 585,590,024.97 

Ordinary  expenditures  fiscal  year  1888 267,924,801.13 

Redemption  of  debt  fiscal  year  1888 74, 813, 563. 05 

342,738,364.18 


Balance  June  30,  1888 242,851,660.79 


Cash  in  Treasury  as  per  debt  statement 243,674,167.85 


Cash  balance  July  1,1888 24.3. 674, 167.  a5 

Receipts  to  March  1, 1889 25:5,210,423.38 

498,884,591.23 

Ordinary  expenditures,  July  1,  1888,  to  March 

1,1889 222,434,625.25 

Redemption  of  debt,  July  1,  1888  to  March  1, 
1889 92,869,643.85 

315,304,269.10 


Balance  March  1,1889 183,  .580, 322. 13 


Cash  in  Treasury  as  per  debt  statement 183,827,190.29 

1904 


21 

•Cash  balance  March  1,1889 $183,827,190.29 

Receipts  to  July  1,1889 139,663,280.40 

$313,489,470.69 

Ordinary  expenditures,  March  1,  1889.  to  July 

1,1889 _..: 77,36.5.088.00 

Redemption  of  debt,  March  1,1889,  to  July  1,1889.      38,389,794.50 

105,6.54,883.50 


Balance  July  1,1889 207,834,588.19 


Cash  in  Treasury  as  per  debt  statement 309,479,874.01 


Cash  balance  July  1,1889 209,479,874.01 

Receipts  fiscal  year  1890 4U3,  OSO,  983. 63 

■ 613,560,856.64 

Ordinary  expenditures  fiscal  year  1890 318, 040, 710. 66 

Redemption  of  debt  fiscal  year  1890 104, 642, 149. 50 

423,683,860.16 


Balance  June  30, 1890 189,877,996.48 


Cash  in  Treasury  as  per  debt  statement 189,993,104.30 


Cash  balance  July  1,1890 189,993,104.30 

Receipts  fiscal  year  1891 393.612,447.31 

National-bank  fund  deposited  fiscal  year  1891 ...      63, 571 ,  690. 75 

— i 646,177,343.26 

Ordinary  expenditures  fiscal  year  1891 365, 773, 905. 35 

Redemption  of  debt  fiscal  year  1891 100,989,306.37 

National-bank  notes  redeemed  fiscal  year  1891. .      33, 5-53, 298. 50 

490,316,510.33 


Balance  June  30, 1891 155,860,733.04 


Cash  in  Treasury  as  per  debt  statement 153,893,808.83 


Cash  balance  July  1,  1891 1,53,893,808.83 

Receipts  fiscal  year  1893 354,937,784.24 

National-bank  fund  deposited  fiscal  year  1893. . .        3, 977, 838. 00 

511,809,431.07 

Ordinary  expenditures  fiscal  year  1893 345,033,330.58 

Redemption  of  d  ebt  fiscal  year,  1S93 34, 1333, 836. 98 

National-bank  notes  redeemed  fiscal  year  1893. .      16, 233, 731. 00 

385,588,888.56 


Balance  June  30,  1893 126,220,543.51 


Cash  in  Treasviry  as  per  debt  statement 126,693,377.03 


Cash  balance  July  1,  1893 126,693,377.03 

Receipts  fiscal  vear  1893 38-5,818,638.78 

National-bank  fund  deposited  fiscal  year  1893. . .        3, 937, 580. 00 

515,448,585.81 

■Ordinary  expenditures  fiscal  year  1893 383,477,954.49 

Redemption  of  debt  fiscal  year  1893 687, 003. 00 

National-bank  notes  redeemed  fiscal  year  1893..        9,037,651.50 

393,202,608.99 


Balance  June  30, 1893 123,245,976.83 


Cash  in  Treasury  as  per  debt  statement 122,463,290.38 


Cash  balance  July  1,  1893 123,463,390.38 

Receipts  fiscal  year  1894 397,723,019.35 

National-bank  fund  deposited  fiscal  year  1894. . .      16, 637, 783. 50 
Receipts  from  sale  of  5  per  cent  bonds 58,633,395.71 

495,455,388.84 

Ordininary  expenditures  fiscal  year  1894 367,525,279.83 

National -bank  notes  redeemed  fiscal  year  1894  . .      10, 929,  .535. 75 

378,454,815.58 


Balance  June  30, 1894 117,000,573.26 


Cash  in  Treasury  as  per  debt  statement 117,584,438.13 

1904 


22 

Cash  balance  Jwly  1,1894 $117,584,436.13 

KccfiiJts  to. raimary  1,1895 159. Ss<), 457. 33 

Natioual-bank  fund  deposited  to  Jaimary  1, 1895.  S,  606, 755. 00 

Receipts  from  sale  of  5  per  cent  bonds. 58,538,500.00 

Ordinary  expenditures  to  January  1,  1895. 180,953,923.63 

National-bank  notes  redeemed  to  January  1, 1895.  5, 433, 991. 00 


$344,179,148.45. 
192,376,913.6a 


Balance  January  1, 1895 151.803,234.83 

Cash  in  Treasury  as  per  debt  statement 153,337,579.99 

This  statement  includes  gold  and  available  cash. 

Note. — Many  deposits  of  cash  imludod  in  the  cash  balance  in  the  Treasury 
are  not  taken  into  the  receipts  of  the  (rovernment  until  adjustments  of  ac- 
counts are  reached  and  the  amounts  finally  rovered  into  thi- Treasury  by 
warrants.  This  will  explain  the  difference  betwcL-n  the  receijits  and  expend- 
itures, as  shown  in  this  statement,  and  the  cash  balance  as  shown  by  th& 
public  debt  statement. 

The  amount  of  debt  annually  required  to  be  redeemed  on  the  sinking  fund 
account  aggregat'-^s  about  5;49,(KX).0(W.  The  amount  redeemed  for  the  fund  for 
the  fiscal  year  1893  fell  short  of  the  requirement  by  Sll,3  '7,825.36,  and  for  the 
fiscal  years  1893  and  1^94  S41,904,.54o.72  and  S48,4-Sii,(il4.37,  re.spectively,  making  a 
total  balance  due  the  fund  on  June  30, 1894,  of  $101,783,383.35. 

Public  debt  redeemed. 
Fiscal  year —  , 

1881 S8.5,4;e,381.05 


Fiscal  year — 

1888 $74. 813,  .503. 05 

1889 121,264. 4:i8.;« 

1890 lil4,tU2, 149.50 

1891 *124,542.6U4.87 

1892 t40, 565,  .5.57. 98 

1803 t9, 734, 654.  .50 

1894 55,466,0.50.55 


1882 - 166,279,955.55 

1883 134,057,916.96 

1884 99,861,684.50 

1885 45, 984, 485. 4;^ 

1886 44,51^5,993.36 

1887 127,918,468.15 

From  this  statement  it  appears  that  on  Jnly  1, 
189.5,  the  total  balance  in  the  Treasury,  includ- 
ing gold.  Treasury  notes.  United  States  notes, 
and  fractional  coin  and  silver  dollars,  was $153, 337.  .579. 99 

Deduct  the  reserve  fund. 100. 000, 000. 00- 


Available 53,337,579.99 

Balances  appropriated  and  unexpended  January 

1, 1895,  including  the  sinking  fund 255, 955, 039. 94 

The  amendment  reported  by  the  committee  is  intended  to  equip 
and  arm  the  Secretary  of  the  Treasury  so  that  hereafter,  if  he 
chooses  to  exercise  it,  when  the  Senator  from  Delaware  [Mr.  Gr-\y] 
goes  to  the  Treasury  Department  and  says,  "I  want  my  money," 
he  will  say,  ''  We  will  give  you  greenbacks  or  we  will  give  you 
these  certificates  if  you  desire  them."  It  makes  it  a  popular  loan, 
and  enables  the  Secretary  of  the  Treasury  to  dispose  of  a  securitj' 
that  runs  only  two  years  at  the  option  of  the  Government,  and  at 
a  rate  of  interest  far  below  that  which  he  has  paid  for  the  gold 
which  he  now  has. 

Mr.  GRAY.  If  the  Senator  will  allow  me,  as  this  statement  is 
a  very  interesting  one,  I  wish  to  ask  him  whether  it  does  not  bear 
out  the  hopefulness  of  the  Secretary  of  the  Treasury  that  we  find 
that  since  December  31,  1894,  there  has  been  an  increase  from 
whatever  cause  in  the  available  cash  balance,  and  that  increase  or 
that 

*  Includes  $23,553,298.50  national-bank  notes  redeemed  under  act  of  July  14, 
1890. 

+  Includes  $16,333,721  national-bank  notes  redeemed  under  act  of  July  14, 
1890 

t  Includes  $9,037,651.50  national-bank  notes  redeemed  under  act  of  July  14> 
1890. 

1904 


23 

Mr.  ALDRICH.  How  much  does  the  Senator  say  the  increase 
has  been? 

Mr.  GRAY.  From  about  $67,000,000  to  about  $100,000,000— 
$99,000,000;  and  that  available  cash  balance  (so  called)  has  been 
steadily  maintained  for  a  period  of  thirty  days. 

Mr.  ALDRICH.     Will  the  Senator  from  Maryland  permit  me? 

Mr.  GORMAN.  That  comes  exactly  as  I  have  stated — and  I 
tried  to  make  myself  understood — not  from  any  increase  in  the 
ordinary  receipts  of  the  Government,  but  from  the  redemption 
of  United  States  notes  and  Treasury  notes. 

Mr.  GRAY.  If  the  Senator  will  understand  my  point,  I  admit 
the  greenbacks  that  have  come  into  the  Treasury  and  have  been 
redeemed  in  gold,  have  been  carried  to  the  account  of  the  gen- 
eral fund  and  made  available  as  part  of  the  cash  balance;  but 
since  that  operation  ceased  the  available  cash  balance  has  been 
maintained  at  that  figiire,  to  wit,  at  about  $100,000,000,  for  a  pe- 
riod of  nearly  thirty  days. 

Mr.  ALDRICH.  If  the  Senator  from  Delaware  will  permit 
me,  the  statement  of  the  Senator  from  Maryland  is  easily  ex- 
plainable. 

Mr.  GRAY.     I  understand  the  statement. 

Mr.  ALDRICH.  The  available  cash  balance  as  shown  on  the 
31st  of  December,  1894.  was  obtained  by  deducting  $100,000,000  as 
a  reserve  from  the  cash  on  hand.  The  statement  of  February  18 
only  dedvicts  $55,000,000  from  the  cash  on  hand  as  the  amount  of 
the  reserve.  According  to  the  Secretary  of  the  Treasury  the  re- 
serve has  diminished  from  $100,000,000  to  $45,000,000  from  the  1st 
of  January  to  the  18th  of  Febriiary. 

Mr.  GRAY.  It  only  bears  out  what  the  President  said  in  his 
message,  that  the  revenues  promised  to  be  ample  but  that  they  do 
not  come  in  the  shape  of  gold,  which  was  what  he  asked  Congress 
to  arm  him  with  the  power  of  obtaining. 

Mr.  ALDRICH.  But  there  has  been  a  great  change  in  the 
available  cash  balance  from  the  1st  of  January  to  the  18th  of  Feb- 
ruary, as  can  be  easily  seen  by  an  examination  of  these  two  state- 
ments. 

Mr.  GRAY.     That  is  what  I  say. 

Mr.  ALDRICH.  If  you  place  the  reserve  at  $100,000,000  in  both- 
cases  there  was  no  such  increase,  in  fact  there  was  no  perceptible 
increase  between  the  1st  of  January  and  the  18th  of  February. 

Mr.  GRAY.  It  shows  that  there  has  been  no  decrease  in  the 
cash  balance.  The  Secretary  of  the  Treasury  is  maintaining  our 
position. 

Mr.  GORMAN.  Mr.  President,  there  is  no  escape  from  the  gen- 
eral proposition,  and  that  is  the  one  which  is  to  be  met  by  Con- 
gress. You  have  only  paid  the  expenses  of  the  Government  by 
using  the  proceeds  of  the  sale  of  $100,000,000  of  bonds  in  the  last 
twenty-five  months. 

Mr.  President,  that  was  the  case  before  the  present  Administra- 
tion came  into  power.  During  the  last  Administration  the  very 
qiiestion  was  presented  here,  and  I  stated  the  views  then  as  I  do 
now,  that  the  revenue  laws  up  to  that  date  had  failed  to  produce 
a  sufficient  amount  of  money  by  $150,000,000.  It  was  nearer  $250,- 
000,000.  When  the  present  Administration  came  into  power  they 
were  interfered  with  by  the  commercial  conditions  that  no  legis- 
lation in  Congress  was  responsible  for.  They  have  been  intensi- 
1904 


24 

fied  in  the  last  two  years.     The  revenues  have  fallen  off  and  the 
expenditures  have  increased  year  by  year. 

1  will  place  the  statement  in  my  remarks  to  show,  as  I  did  three 
years  ago,  that  our  expenses  were  about  $500,000,000  a  year,  and 
there  was  no  possibility  in  the  near  future  of  decreasing  them: 

Revenues  for  fiscal  year  ending  Jiino  ;50, 1801 . .    $.»Z,  012, 447. 31 
Revenues  for  fiscal  year  ending  June  30, 1892. .      354, 937, 784. 34 

Total  revenues  for  fiscal  years  ending  Juno  30, 1891, 1892. .    $747, 550, 231. 55 
Expenditures  for  fiscal  year  ending  June  30, 

ISi'l  .- - 409,780,016.73 

Expenditures  for  fiscal  year  ending  June  30, 

lsy2 aS2,597,510.56 

Total  expenditures  for  fiscal  years  ending  June  30, 1891, 
1892 792,377,527.28 


Excess  of  expenditures  over  revenues  for  fiscal  years 
ending  June  30,1891,1892 44,827,295.73 


Revenues  for  fiscal  year  ending  June  30, 1891 . .  392, 612, 447. 31 
Revenues  for  fiscal  year  ending  June  30, 1892. .  354, 937, 784. 24 
Revenues  for  fiscal  year  ending  June  30, 1893. .      385, 819, 628.  78 

Total  revenues  for  fiscal  years  ending  June  30,1891, 18!»2, 

1893. 1,133,369,800.33 

Expenditures  for  fiscal  year  ending  June  30, 

1891 409,780,016.73 

Expenditures  for  fiscal  year  ending  June  30, 

1892 382, 597,. 510. 56 

Expenditures  for  fiscal  year  ending  June  30, 
1893 390,180,698.99 


Total  expenditures  for  fiscal  years  ending  June  30,1891, 
1892,1893 - -..-  1,182.564.220.27 


Excess  of  expenditures  over  revenues  for  fiscal  years 
ending  June  30,1891,1892,1893 09,194,365.94 


Revenues  for  fiscal  years  ending  June  30, 1894.      297, 722,019. 35 
Revenues  for  six  months  ending  December  31, 
1894 1.59,389,457.33 


Total  revenues  for  fiscal  year  ending  .June  30,  1894,  and 

for  six  months  ending  December  31,  1894 457,111,470.57 

Expenditures  for  fiscal  year  ending  June  30, 

1S94 ., 307,740,807.03 

Expenditures  for  six  months  ending  Decem- 
ber 31,  1894 180,979.467.63 


Total  expenditures  for  fiscal  year  ending  June  30,  1894, 
aiid  for  six  months  ending  December  31,  1894 554,720,334.00 

Excess  of  exjjenditure^  over  revenues  for  fiscal  year  ending 
June  30,  1894,  and  for  six  months  ending  December  31, 1894. .        97, 014, 858. 09 


Revenues,  other  than  postal  receipts,  for  the  fiscal  years 
ending  June  30,  1891,  1892,  1893,  1894,  and  for  six  months 
ending  December  31    1894 1,590,481,336.90 

Expenditures  for  the  fiscal  years  ending  June  30,  1891,  1892, 
1893,  1894,  and  for  six  months  ending  December  31,  1894,  in 
eluding  deficiencies  paid  in  the  postal  service 1,737,290,-500.93 

Expenditures  for  the  fiscal  years  ending  June  30,  1891,  1892, 
1893,  1894,  and  for  six  months  ending  December  31, 1894,  ex- 
ceed the  revenues  for  the  same  period  by 146, 809, 224. 03 


The  Secretary  estimates,  in  his  answer  to  resolution  of  Jan- 
uary 28,  ImC).  that  the  revenues  from  customs,  interiial  rev- 
enue, and  niiscellant'ous,  all  revenues  except  tiiat  from  the 

sale  of  bonds,  will  be 380,610,543.00 

1904 


25 

"Which  is  an  average  rate  for  each  month  in  the  year  of $31,717,545.00 

From  the  1st  day  of  July,  1894,  to  the  :iOth  day  of  February, 
18'ja.  abont  seven  and  two-third  months,  the"  total  I'eceipts 

have  been 203,533.595.67 

Which  is  an  average  rate  diiring  each  month  of 2ii,417,251.60 

The  total  receipts  during  the  month  of  January  (which  is  the 

first  month  embraced  m  the  Secretary's  estimate)  were 37, 804. 399. 71 

As  against  his  average  of.. 31,717,  .545. 00 

For  the  first  twenty  days  of  February  the  total  receipts  were.        15, 338, 738. 64 
This  shows  that  the  estimated  receipts  are  unquestionably  largely  in  excess 
of  the  actjial  result. 

The  expenditures  for  the  calendar  year  are  estimated  at $358,047,530.00 

While  the  average  actual  payments  per  year  out  of  the  Treas- 
ury for  the  four  fiscal  years  ending  June  30, 1891, 1893,  1893, 

and  1894  were 387,577,733.33 

Which  is  greater  than  his  estimate  for  this  calendar  year  by 
over 29,000,000.00 

The  qnestion  arises,  whether  it  is  possible  to  reduce  expendi- 
tures $29,000,000  when  the  appropriations  are  as  lai'ge  as  hereto- 
fore. Mr.  Presitlent,  I  do  not  think  it  possible  to  make  .such  re- 
ductions.    There  is  nothing  to  warrant  such  a  statement. 

Mr.  President,  the  Government  has  been  like  any  individual 
wovild  be.  We  have  spent  more  money  than  we  have  made,  and 
there  was  but  one  alternative,  bankruptcy  or  to  borrow  money. 
We  borroAved  $150,000,000  or  $1(50,000,000.  The  question  now 
arises  whether  we  will  continue  to  borrow  upon  the  onerous  terms 
which  have  been  imposed  upon  us,  or  whether  we  will  give  the 
pjttriotic  people  of  the  country  an  opportunity  to  take  an  obliga- 
tion of  the  Government  as  good  as  gold,  one  that  is  perfectly  good 
.and  bears  only  'd  per  cent  interest,  and  will  be  redeemable  when 
the  act  which  the  distinguished  Senator  from  Indiana  [Mr.  VooR- 
HEEs]  and  those  of  us  on  this  side  passed  will  produce  the  revenue, 
as  it  will  produce  the  revenue  in  two  years,  to  retire  these  very 
securities. 

There  is  no  reflection  vipon  the  President  in  any  proposition  that 
we  submit.  There  is  no  reflection  upon  the  Secretary  of  the 
Treasury,  whom  I  admii-e.  But  I  say  that  if  this  proposition  is  to 
be  defeated,  and  if  we  are  to  run  the  risk  of  suspending  payment, 
paralyzing  works  of  public  enterprise,  preventing  the  Navy  from 
being  fairly  increased  and  the  Army  from  being  properly  con- 
diicted,  that  responsibility  must  be  imderstood  by  the  people  to  be 
taken  by  whatever  ofificial  has  the  power  to  say  that  he  does  not 
want  this  grant  of  power,  and  that  he  will  not  exercise  it  if  he 
has  it. 

Mr.  TELLER,  after  addressing  the  Senate,  made  a  motion  to 
lay  the  amendment  on  the  table. 

Mr.  GORMAN.  I  hope  the  Senator  will  withdraw  his  motion 
for  a  moment. 

Mr.  TELLER.  I  will  withdraw  it  until  I  hear  what  the  Sena- 
tor desires. 

Mr.  GORMAN.  Mr.  President,  I  tried  to  state  this  niorning 
frankly  withoiit  reservation  the  views  entertained  by  the  Com- 
mittee on  Appropriations  in  regard  to  this  provision.  We  were 
perfectly  well  aware  of  the  fact  that  efforts  had  been  made  in 
both  branches  of  Congress,  bvTt  particularly  in  the  other,  to  dis- 
pose of  this  entire  financial  question,  all  of  which  had  resulted  in 
no  legislation  whatever,  and,  being  compelled  to  ascertain  as 
best  we  could  the  exact  condition  of  the  Treasury,  taking  into 
1904 


26 

account  the  appropriations  which  are  provided  for  in  the  bills 
■which  are  before  ns  and  those  before  the  Coiniuittee  on  Appro- 
priations, we  believed  it  to  be  tlie  highest  duty  to  give  the  Senate 
the  opportunity  to  determine  whether  additional  power  should  be 
granted  to  the  Secretary  of  the  Treasury  to  meet,  as  we  believed 
what  must  be,  a  deficiency,  if  the  obligations  of  the  Government 
are  to  be  paid. 

From  the  remarks  which  have  been  made  by  Senators  on  this 
side  of  the  Chamber,  who  I  take  it  speak  after  consultation 
elsewhere  who  at  all  events  put  a  constriaction  upon  the  official 
statement  of  the  Secretary  of  the  Treasury  and  of  the  President  of 
the  United  States  which  we  on  the  Committee  on  Appropriations 
do  not  think  is  warranted  by  the  facts  in  the  case;  confronted  as 
we  are  with  the  statement  made  by  the  distinguished  Senator  from 
Ohio  [Mr.  Sherman],  which  iinder  the  circumstances  was  per- 
fectly proper  and  riglit  from  his  standpoint;  in  view  of  the  state- 
ments made  on  this  side  by  the  distinguished  chairman  of  the 
Committee  on  Finance  [Mr.  Voorhees]  .  whose  judgment  is  that 
additional  provision  is  not  required,  if  I  did  not  misunderstand 
him;  considering  the  statements  of  the  Senator  from  Nevada,  and 
others,  whom  it  is  not  necessary  to  mention,  that  they  will  persist 
in  discussing  the  entire  financial  problem .  to  which  of  course  there 
will  be  no  end,  or  at  least  no  end  before  the  4th  of  March;  with  the 
sudden  conversions  which  have  apparently  taken  place,  as  sudden 
as  those  we  read  of  in  sacred  history,  which  I  confess  have  amazed 
some  of  us  on  this  side  of  the  Chamber,  on  the  part  of  Senatoi\s 
whose  active  support  we  hoped  to  have  in  dealing  with  this  question 
of  the  condition  of  the  Treasury;  in  view  of  the  fact  that  b(>]iind 
this  bill,  which  is  a  great  appropriation  bill,  there  stands  the  legis- 
lative bill,  not  yet  considered  by  this  body,  the  general  deticiency 
bill,  and  the  naval  appropriation  bill  still  in  the  Committee  on 
Appropriations — the  bill  to  be  reported  to-morrow,  as  the  chair- 
man of  the  committee  requests  me  to  say — with  the  fortifications 
bill,  the  District  of  Cohambia  appropriation  bill,  the  diplomatic 
api)ropriation  bill,  the  Post-Office  appropriation  bill,  and  the  agri- 
cultural and  Indian  appropriation  bills  still  in  conference,  and  by 
12  o'clock  on  Monday  next  all  those  bills  must  be  disposed  of;  and, 
furthermore,  in  view  of  the  attitude  of  Senators  here  on  both  sides 
of  the  Chamber,  by  instruction  of  the  Committee  on  Appropria- 
tions, I  wish  to  say  to  the  Senate  that  it  will  require  every  mo- 
ment of  time  now  remaining  to  pass  those  bills,  and  controverted 
questions  such  as  the  one  now  pending  can  not  be  discussed  for 
three  hours  more,  and  therefore,  with  a  view  to  facilitating  the 
public  business,  not  changing  our  views  as  to  the  necessities  of  the 
Treasury,  I  withdraw  the  amendment. 

The  VICE-PRESIDENT.     The  amendment  is  withdrawn. 

Mr.  MILLS.  I  offer  the  amendment  which  I  send  to  the  desk, 
to  come  in  as  section  2  of  the  bill,  in  place  of  the  amendment  with- 
drawn. 

Mr.  ALLISON.  Before  the  amendment  of  the  Senator  from 
Texas  is  read  I  should  be  glad  to  know  the  parliamentary  situa- 
tion of  the  second  section. 

Mr.  GORMAN.     It  is  withdrawn. 

]\Ir.  ALLISON.  The  Senator  from  Maryland  withdrew  it,  but 
it  is  in  the  bill,  and  I  think  in  some  form,  by  a  vote  of  the  Senate 
or  by  some  direction,  it  should  be  disposed  of  rather  than  by  simi^ly 

190i 


27 

withdrawing  it.    I  am  not  quite  sure  that  takes  it  out  of  the  bill. 

Mr.  COCKRELL.  I  think  the  committee  can  withdraw  the 
amendment  in  that  way. 

Mr.  GORMAN.  Under  the  rule  we  have  the  right  to  with- 
draw it. 

Mr.  ALLISON.  If  that  be  true,  I  have  no  objection.  I  merely 
wish  to  say  that  I  concur  fully  in  the  suggestions  made  by  the 
Senator  from  Maryland.  When  I  consented  to  the  insertion  of 
this  provision  in  the  appropriation  bill  I  supposed  it  would  meet 
with  general  approval  in  the  Senate,  but  I  find  that  those  who 
are  more  intimate  with  the  Secretary  of  the  Treasury  than  I  am 
as  to  these  public  questions  believe  that  he  does  not  need  it,  and  I 
have  no  doubt  he  is  not  in  favor  of  it.  I  know  other  Senators  on 
this  floor  who  have  various  views  upon  the  financial  question  are 
also  opposed  to  it.  Therefore  it  is  absolutely  necessary  that  the 
amendment  should  be  withdrawn.  I  fully  concur  in  the  with- 
drawal. 

The  VICE-PRESIDENT.     The  amendment  is  withdrawn. 

Mr.  PALMER.     What  is  withdrawn? 

Mr.  ALLISON.     The  whole  of  section  2. 

The  VICE-PRESIDENT.    That  is  correct. 
mi 

O 


THE  CURRI 


SPEECH 


HON.  WALTER  GRESHAM, 


OF    TEXAS. 


HOUSE   OF   REPRESENTATIVES, 


Friday,  January  4,  1895. 


"WASHINGTON. 

1895. 


SPEECH 

OP 

HON.  WALTER    GRESHAM 


The  House  heing  in  Committee  of  the  "Whole  on  the  state  of  the  Union,  and 
having-  unuor  coiisidfratiun  the  bill  (H.  R.  fiU9)  to  amend  the  laws  relating  to 
national  banking  associations,  to  exempt  the  notes  of  State  banks  from  taxa- 
tion n]ion  certain  conditions,  and  for  other  purposes — 

Mr.  GRESHAM  said: 

Mr.  Chairman:  In  discussing  a  measure  which  is  to  meet  the 
requirements  of  a  great  financial  emergency  like  the  one  now  con- 
fronting our  country,  we  must  take  into  consideration  the  changes 
in  business  methods  that  have  been  brought  about  by  imiS'oved 
banking  facilities  and  the  application  of  electricity  and  steam  to 
the  uses  of  commerce.  We  must  also  consider  the  fact  that  the 
former  duties  of  a  bank  were  principally  if  not  entirely  confined 
to  receiving  moneys  on  deposit  for  safe-keeping  and  for  discount- 
ing. But  now,  without  the  use  of  banks  as  mediums  of  exchange, 
the  trade  of  our  country  and  the  commerce  of  the  world  could  not 
be  qtiickly  and  economically  handled.  The  machinery  of  the  banks 
is  as  essential  to  the  business  wants  of  the  world  as  the  steam  en- 
gine that  pulls  the  cars  or  the  propeller  that  carries  our  com- 
modities on  the  high  seas.  Formerly  a  vessel  hunted  the  world 
for  a  market  for  her  cargo,  and  after  many  months  brought 
back  what  she  received  in  exchange  therefor.  Now,  by  the  use  of 
electricity,  her  cargo  is  disposed  of  before  she  reaches  her  destina- 
tion, its  proceeds  transmitted  by  bank  exchange,  and  her  return 
cargo  secured  and  paid  for  through  the  same  mediums,  thus  effect- 
ing a  great  saving  in  time  and  expense  both  to  the  shipowner  and 
to  the  merchant.  Formerly  remote  nations  had  little  commercial 
intercourse.  Now,  through  the  improved  methods  of  modern  civ- 
ilization, the  uttermost  parts  of  the  earth  are  commercially  nearer 
to  the  great  ntarkets  of  the  world  than  many  of  the  States  of  the 
Union  were  to  each  other  fifty  years  ago. 

You  can  now  reach  almost  any  quarter  of  the  globe  easier  and 
in  less  time  than  the  products  from  the  frontier  of  Texas  could 
thirty  years  ago  be  transferred  to  Galveston,  its  chief  commercial 
city. 

The  result  of  these  changes  has  demonstrated  that  a  million  dol- 
lars of  gold  to-day  will  transact  more  business  in  a  sliorter  time 
and  with  less  expense  than  ten  times  that  amount  would  have  done 
forty  years  ago. 

Under  our  existing  banking  and  monetary  system  we  find  the 
press  and  the  Representatives  of  one  section  of  the  country  com- 
plaining of  a  redundancy  of  our  currencj'  and  a  plethora  of  money, 
while  those  from  other  sections  are  clamoring  for  and  demand- 
2  1746 


ing  more  money  and  greater  facilities  for  securing  a  circulating 
medium.     Some  are  willing  to  take  "  fiatism  "  for  money. 

These  are  the  conditions  confronting  us  to-day.  How  are  we 
to  deal  with  them?  Does  the  pending  measure  in  any  way  tend 
to  correct  the  evils?  If  it  does,  we  should  ado^it  it;  if  it  does  not, 
we  should  amend  it  so  that  it  can  be  made  to  accomplish  the 
desired  ends. 

The  position  taken  by  the  South  and  West,  that  more  money 
and  better  banking  facilities  are  needed,  can  not  be  controverted 
by  any  man  who  knows  the  conditions  of  those  sections  of  our 
country.  I  believe  the  complaints  of  a  redundancy  of  currency 
which  come  from  the  East  and  from  the  great  financial  centers  of 
the  world,  caused,  as  they  say,  by  the  laws,  which  force  nearly 
$500,000,000  of  United  States  demand  notes  in  circulation,  at  the 
expense  of  the  credit  of  our  Government,  is  also  well  founded. 
Can  we  in  any  way  satisfy  these  apparently  conflicting  interests 
and  adopt  a  plan  to  meet  the  needs  of  all  sections?  I  believe  we 
can,  and  that  the  proposed  substitute,  vnth  certain  amendments 
in  regard  to  the  sale  of  bonds  as  reapeatedly  recommended  by  the 
President  and  Secretary  of  the  Treasury,  will  produce  the  desired 
results.  The  national  banking  system  was  devised  as  a  war  meas- 
ure, while  the  nation  was  in  the  throes  of  a  great  revolution,  and 
it  had  for  its  objects  the  creation  of  a  market  for  the  bonds  of  the 
Grovernment  and  the  retiring  of  a  redundant  and  rapidly  increas- 
ing national  currency,  and  for  these  ptirposes  it  served  its  part 
weU. 

But  now,  after  thirty  years,  you  find  the  conditions  that  I  have 
just  described — too  much  money  in  one  section  and  not  enoiigh 
in  another.  The  present  banking  laws  have  evolved  in  the  last 
thirty  years  two  requisites  that  are  essential  to  any  successful 
banking  system,  whether  in  this  or  any  other  country.  One  is 
safety  and  the  other  uniformity. 

SAFETY. 

Does  the  proposed  Carlisle  substitute  insure  safety  both  as  to 
depositors  and  as  to  note  holders?  1  think  it  does.  It  provides  that 
any  banking  association  desiring  to  take  out  circulating  notes 
may  do  so  to  an  amount  not  exceeding  75  per  cent  of  its  paid-up 
and  unimpaired  capital  upon  depositing  with  the  Treasurer  of 
the  United  States  legal-tender  notes  as  a  guaranty  fund  equal  to 
30  per  cent  of  the  circulating  notes  it  proposes  to  then  take  out. 
As  security  for  these  notes  we  have — 

First.  A  deposit  of  United  States  legal-tender  notes  in  the  Treas- 
ury of  the  United  States  equal  in  amount  to  30  per  cent  of  bank 
notes  in  circulation. 

Second.  We  have  a  5  per  cent  safety  fund  derived  from  a  semi- 
annual tax  of  one-quarter  of  1  per  cent  upon  the  circulating  notes 
of  all  banks  that  may  take  out  notes  under  the  provisions  of  this 
act.  This  safety  fund,  if  it  had  been  in  force  since  the  organizii- 
tion  of  the  present  banking  system,  and  this  tax  been  continu- 
ously collected,  the  notes  of  every  failing  bank  could  have  been 
paid  and  the  amount  of  the  safety  fund  remaining  would  have 
been  $50,000,000,  and  this  without  any  increase  of  the  burdens 
upon  the  banks  under  existing  laws. 

Third.  We  give  to  the  note  holder  a  first  lien  upon  the  assets  of 
the  bank.  The  experience  of  this  country  and  of  the  balance  of  the 
1746 


world  demonstrates  fhat  a  bank  currency,  backed  by  such  secur- 
ity and  protected  by  snch  safeguards  as  will  l)e  thrown  around  it 
by  the  law,  will  be  absoluti^ly  safe. 

Mr.  COX.  Will  my  friend  allow  me  to  call  his  attention  to  the 
fact  that  additional  to  this  is  that  liability  of  the  stockholders? 

Mr.  GRESHAM.  Yes;  that  is  a  part  of  the  assets  of  the  bank, 
I  take  it.  The  proposed  plan  is  modeled  after  the  Canadian  sys- 
tem, but  with  additional  security  for  the  note  holder.  No  holder 
of  a  Canadian  bank  note  has  ever  lost  a  dollar  tliereof  by  reason 
of  the  bank's  insolvency;  and  yet  it  is  secui-ed  only  by  a  first  lien 
upon  the  assets  of  the  ]»ank,  including  the  double  liability  of  its 
stockholders,  and  by  a  safety  fund  equal  in  amount  to  5  per  cent 
of  the  notes  issued  by  the  banks,  paid  by  the  banks  to  the  minis- 
ter of  finance  and  receiver-general. 

Mr.  DUNN.  Will  the  gentleman  allow  me  to  ask  him  a  ques- 
tion? 

Mr.  GRESHAM.     Yes,  sir. 

Mr.  DUNN.  Do  you  believe  it  is  constitutional  for  the  Gov- 
ernment to  tax  one  enterprise  for  the  benefit  of  another? 

]Mr.  GRESHAM.  I  do,  if  the  Government  imposes  the  tax  as  a 
condition  precedent  to  the  exercise  of  a  franchise. 

Mr.  WARNER.  Do  I  understand  the  gentleman  to  suggest 
that  under  the  present  Canadian  sj'stem  a  single  dollar  has  ever 
been  lost  to  any  holder  of  a  circulating  note? 

Mr.  GRESHAM.  I  understand  that  there  has  not  been  a  dollar 
lost. 

Mr.  WARNER.  That  is  the  fact.  I  misunderstood  the  gentle- 
man. 

Mr.  GRESHAM.  Mr.  Chairman,  the  note  holders  under  the 
Canadian  system,  with  only  a  5  per  cent  safety  fund  and  a  first 
lien  upon  the  assets  of  the  bank,  have  never  lost  anything.  There 
the  banks  have  a  riglit  to  issue,  not  to  the  limited  amount  of  75 
per  cent  of  their  unimpaired  and  paid-up  capital,  but  to  the  par 
value  thereof.  We  propose  to  give  to  the  note  holder  the  same  se- 
curities Canada  gives,  and  to  cut  the  right  of  issue  25  per  cent, 
making  the  notes  to  that  extent  safer  than  the  Canadian  system. 
We  also  require  a  deposit  of  a  30  per  cent  guaranty  fund  in  addi- 
tion thereto.  Now.  if  that  system  is  a  success,  and  has  furnished 
an  elastic  and  safe  currency  that  circulates  over  that  entire  country, 
which  in  its  business  relations  and  extent  of  territory  is  very  much 
like  our  own,  how  it  is  possible  for  a  currency  issued  under  the 
proposed  system,  with  the  additional  securities  and  safeguards,  to 
be  anything  else  but  secure? 

Let  us  now  compare  the  security  of  the  currency  issued  by  the 
Imperial  Bank  of  Germany  with  that  issued  under  the  Carlisle 
plan;  that  bank  with  a  capital  of  120,000,000  marks,  has  thei-ight 
to  issue  notes  to  the  amount  of  about  273, #00, 000  marks,  more  than 
double  its  capital  stock,  but  the  notes  issued,  while  they  must  be 
covered  as  to  one-third  by  the  gold  held  in  its  vaults,  and  the 
other  two-thirds  by  not  exceeding  ninety  days'  bills  on  German 
towns,  they  are  not  secured  by  alien  on  the  assets  of  the  bank,  nor  is 
there  any  double  liability  of  the  stockholders  to  secure  them.  The 
maximum  amount  of  the  notes  that  may  be  issued  by  that  bank 
under  certain  conditions  may  be  exceeded  on  payment  of  a  tax  of 
5  per  cent  on  notes  issued  in  excess  thereof. 

1745 


This  33|^  per  cent  gold  reserve  and  its  bills  receivable  upon  which 
its  notes  are  issxxed  has,  as  its  counterpart  under  the  Carlisle  plan, 
a  deposit  wnth  the  United  States  Treasurer  of  legal-tender  notes 
equal  to  30  per  cent  of  the  outstanding  notes,  a  first  lien  upon  all 
the  bank's  assets,  which  includes  its  bills  receivable  as  well  as  the 
double  liability  of  its  stockholders,  and  in  addition  the  5  per  cent 
safety  fund,  made  up  from  a  tax  upon  the  circulation  of  all  of  the 
banks.  In  the  light  of  this  comparison,  who  can  doubt  the  abso- 
lute safety  of  the  notes  under  the  proposed  plan? 

In  Sweden,  the  Enskilda  banks,  which  mainly  supply  the  cur- 
rency of  that  coixntry  and  which  have  been  in  successful  operation 
for  more  than  fifty  years  without  a  failure,  have  the  right  to  issue 
notes  upon  the  assets  of  the  bank,  limited  only  by  the  amount  of 
securities  held  by  them.  These  notes  are  not  secured  by  a  first 
lien  upon  the  assets  of  the  bank. 

Thus  we  see  that  the  security  provided  for  the  note  holder  by 
this  bill  is  largely  in  excess  of  that  required  by  three  of  the  most 
successful  banking  systems  in  the  world. 

Let  us  now  examine  the  condition  of  the  depositor  under  the 
proposed  system,  for  it  is  more  essential  to  a  successful  banking 
system  that  the  depositor  have  confidence  in  the  bank  than  it  is 
for  the  bank  to  have  the  right  to  issue  currency.  Under  existing 
law  the  note  holders  have  as  security  a  deposit  of  United  States 
bonds,  about  14  per  cent  in  excess  of  the  notes,  and  as  long  as 
this  Government  is  solvent  and  can  sell  its  bonds  at  par  there  can 
be  no  better  security  than  that  now  given  to  the  notes  that  are 
issued  by  the  national  banks. 

Will  the  depositor  be  as  secure  under  the  proposed  system  as  he 
is  now?  Under  existing  laws  the  bank's  available  capital  is  di- 
minished to  the  extent  of  the  cost  of  the  bonds  it  has  to  deposit 
to  obtain  its  charter  and  secure  its  circulating  notes,  which  is  a 
much  larger  per  cent  of  its  capital  than  the  80  per  cent  reqixired 
to  be  deposited  under  the  proposed  bill.  The  larger  amount  of 
available  capital  for  investment  will  augment  the  assets  of  the 
bank  and  thus  diminish  the  chances  of  failure,  but  should  the 
bank  become  insolvent  its  notes  ^vill  be  paid  first  out  of  its  immedi- 
ately available  assets,  its  guaranty  fund,  and  then  out  of  the  5 
per  cent  safety  fund  which  all  the  testimony  shows  will  be  ample, 
leaving  a  much  larger  amount  of  the  assets  as  secixrity  for  tlie 
depositor  than  he  now  has,  and  the  safety  fund  under  the  i)ro- 
posed  substitute  has  no  lien  upon  the  assets  of  the  bank  to  repay  it. 

I  do  not  know  whether  r  -s  change  in  the  substitute  was  noticed 
by  the  committee  or  not,  Ijut  it  is  quite  plain,  and  I  hope  it  will  be 
retained.  The  safety  fund  can  not  recoup  from  the  assets  of  the 
insolvent  bank  for  the  loss  it  may  have  sustained.  Thus  deposit- 
ors who  put  their  money  in  these  banks  will  have  a  mucli  larger 
per  cent  of  the  assets  of  the  bank  as  security  for  their  deposits 
than  they  have  under  existing  laws. 

Mr.  SIMPSON.  Will  the  gentleman  allow  me  to  ask  him  a 
question? 

Mr.  GRESHAM.     Certainly. 

Mr.  SIMPSON.  I  would  like  to  ask  the  gentleman  if  this  bill 
specifies  what  the  assets  of  the  bank  shall  be? 

Mr.  GRESHAM.     What  the  assets  of  the  bank  shall  be? 

Mr.  SIMPSON.    Yes,  ah: 
174J 


6 

Mr.  GRESHAM.  No,  sir;  that  is  left  to  the  officers  of  the  bank 
tinder  the  restrictions  now  prescribed  by  law. 

Mr.  SI]MPSON.  They  might  only  be  a  little  office  furniture, 
some  old  ink  bottles,  and  some  wild-cat  stock. 

Mr.  GRESHAM.  The  law  is  not  changed  in  that  regard. 
Whenever  yon  find  a  man  of  brains  and  ingenuity  enough  to  ac- 
cumulate §100,000,  or  plausibility  enough  to  persuade  others  to 
put  that  amount  in  a  bank  and  let  him  manage  it,  you  can,  as  a 
rule,  trust  him. 

Mr.  SIMPSON.  The  experience  of  the  past,  under  the  old  bank- 
ing system,  was  not  as  you  suggest.  They  generally  found  an 
absence  of  available  assets  when  they  came  to  collect.  * 

Mr.  GRESHAM.  We  are  discussing  national  banks  and  not 
State  banks.     We  will  discuss  them  later  on. 

Mr.  SIMPSON.     I  understood  you  were  discussing  State  banks. 

Mr.  GRESHAM.  No,  sir;  I  am  not  discussing  State  banks;  I 
am  discussing  national  banks. 

Mr.  SIMPSON.    National-bank  currency  is  secured  by  the  bonds. 

Mr.  GRESHAM.  No,  sir.  The  gentleman  has  evidently  not 
read  the  bill. 

Mr.  BELL  of  Texas.  I  would  like  to  ask  my  colleague  a  ques- 
tion there. 

Mr.  GRESHAM.     Certainly. 

Mr.  BELL  of  Texas.  I  am  sure  your  understanding  is  very 
different  from  that  of  many  others  wath  reference  to  the  lien  of 
the  safety  fund  upon  the  assets  of  the  banks  under  the  proposed 
bill.  I  know  it  is  different  from  that  of  gentlemen  sitting  around 
me.  I  think  it  would  be  well  for  you  to  elaborate  your  idea  on 
that  siibject.  I  think  that  you  are  mistaken;  but.  if  you  are  not, 
it  would  be  a  good  idea  for  you  to  explain  the  matter  to  us. 

Mr.  GRESHAM.  In  the  first  place  the  second  section  of  the 
bill 

Mr.  BELL  of  Texas.  Let  me  ask  you  this:  Your  idea  is  that 
if  a  bank  of  $100,000  capital  fails,  then,  under  your  substitute  bill, 
it  has  put  $32,500  with  the  Government  to  seciire  the  $75,000  notes. 
The  $22,500  is  used  to  redeem  the  notes  to  that  amount,  which 
leave  $52,500  to  be  redeemed.  Now,  your  idea  is  that  if  the  safety 
fund  should  contribute  $30,000  toward  the  redemption  of  the 
$52,500  it  would  have  no  lien  on  the  assets  of  the  bank  superior 
to  the  claim  of  depositors. 

Mr.  GRESHAM.     That  is,  the  immediately  available  assets. 

Mr.  BELL  of  Texas.  Of  course  1  understand  you  to  draw  some 
distinction  between  the  immediately  available  and  other  assets. 
But  I  assume  that  the  immediately  available  assets  are  $22,500,  and 
consequently  $o0.000  has  to  ])e  i)aid  out  of  the  safety  fund.  Now, 
my  understanding  is  that  tlie  safety  fund  would  become  the  holder 
of  the  notes,  and  being  the  holder  of  the  notes  would  have  a  lien 
on  the  entire  assets  of  the  bank,  which  will  be  a  prior  lien  to  that 
of  the  depositors  or  other  creditors.  I  understand  your  position 
to  be  exactly  contrary  to  that,  and  therefore  I  think  it  would  be 
well  for  yovi  to  explain  it  more  in  detail. 

Mr.  GRESHAM.     I  think  the  Secretary  agrees  with  me. 

Mr.  BELL  of  Texas.  Perhajjs  you  are  correct,  but  I  think  your 
construction  is  wi'ong,  and  therefore  I  wished  you  to  elaborate 
your  views. 

174d 


Mr.  GRESHAM.  It  is  true  that  the  second  section  of  the  bill 
declares  the  notes  to  be  a  first  lien  upon  the  assets  of  the  associa- 
tion issuing  them,  and  as  between  the  note  holder  and  the  depositor 
there  can  be  no  question  of  the  superior  right  of  the  former,  but 
section  5  provides  for  the  accumulation  in  the  United  States  Treas- 
ury of  a  5  per  cent  safety  fund,  collected  by  a  semianniial  tax  of 
one-fourth  of  1  per  cent  from  all  of  the  banks  upon  the  average 
amount  of  their  respective  circulating  notes  o^^tstanding. 

This  section  then  provides  that  when  a  national  bank  becomes 
insolvent,  its  guaranty  fund  of  30  per  cent,  held  on  deposit  in 
the  Treasury,  shall  be  transferred  to  the  safety  fund,  and  out  of 
the  safety  fund,  augmented  by  the  guaranty  fund,  the  notes  of  the 
failing  bank  shall  be  paid,  and  then  the  immediately  available  as- 
sets, which  is  the  cash  on  hand  at  the  time  of  the  suspension  of  the 
bank,  shall  be  used  to  reimburse  the  safety  fund;  and  should 
it  be  insufficient  for  that  purpose,  this  section  provides  how  the 
deficiency  shall  be  made  good  by  requiring  a  continuation  of  the 
tax  until  the  notes  are  all  paid  and  the  amount  of  the  safety  fund 
is  again  restored  to  its  maximum  amount.  Where  the  law  declares 
a  particular  fund  out  of  which  these  notes  shall  be  paid,  that 
method  would  exclude  the  idea  of  resorting  to  any  other  fund. 
The  bill  does  not  give  to  the  safety  fund  a  lien  nor  has  that  fund 
any  superior  eqiiity  over  the  depositors  in  the  assests  of  the  bank, 
and  therefore  the  doctrine  of  subrogation  could  not  be  applied. 

Mr.  Chairman,  this  bill  gives  safety  both  to  the  note  holder  and 
the  depositor.  The  security  of  the  former,  all  experience  demon- 
strates, is  ample,  and  that  of  the  latter  is  superior  to  what  he  now 
has.  It  is  absolutely  essential  that  we  should  have  a  system  in 
which  the  people  have  confidence,  We  have  an  illustration  of  this 
in  India,  where  it  is  estimated,  by  authorities  referred  to  by  the 
Director  of  the  Mint  in  his  report,  that  since  1835  one-third  of  all 
the  money  in  the  world  has  ^ne,  and  is  there  being  hoarded. 
A  lack  of  confidence  on  the  part  of  the  people  in  the  safety  of  the 
banks  of  the  country  is  largely  the  cause  of  this.  Great  Britain 
has  endeavored,  throtigh  the  instrumentalities  of  modern  banking 
institutions,  to  establish  confidence  and  to  bring  out  from  its  hid- 
ings this  vast  capital  that  now  lies  idle,  and  to  use  it  in  the  chan- 
nels of  trade,  but  thus  far  has  been  successful  only  to  a  limited 
extent. 

In  Persia,  where  the  people  have  been  accustomed  to  hoard  the 
precious  metals  and  have  been  poverty  stricken  for  thousands  of 
years,  an  imperial  bank,  modeled  after  the  English  system,  has 
been  recently  established  and  is  inspiring  such  confidence  that 
the  people  are  depositing  with  it.  The  officers  of  that  bank  report 
that  they  anticipate  that  within  a  few  years  ample  money  will  be 
collected  from  the  people  to  handle  the  commerce  of  the  country 
without  the  aid  of  outside  capital. 

The  report  of  the  Secretary  of  the  Treasury  shows  that  the 
banks  of  this  country  are  very  generally  used  by  the  people  as 
depositories.  In  this  way  they  accumulate  the  money  of  the 
country  and  use  it  in  the  channels  of  trade,  so  that  a  much  smaller 
amount  is  required  to  do  the  business  than  would  be  if,  from  lack 
of  confidence,  they  did  not  deposit  with  the  banks.  The  confi- 
dence of  the  people  in  our  banking  institutions,  which  has  been 
the  slow  growth  of  years,  should  not  be  impaired  by  any  legislar 

1746 


8 

tion  enacted  by  Concrress.  We  of  the  Southwest  require  a  miich 
largei'  amount  of  circulatinf?  medium  in  proportion  to  the  volume 
of  our  business  tlian  the  people  of  the  East;  we  do  not  have  banks 
every  5  or  10  miles.  The  country  is  sparsely  settled  by  an  agri- 
cultural people  who  do  not  have  adequate  banking  facilities  and 
can  not  use  checks  as  freely  as  they  are  used  in  the  more  thickly 
settled  parts  of  our  country.  The  result  is  that  they  are  c(  )iupolled 
to  keep  in  circiilation  a  much  larger  amount  of  currency  in  i)ro- 
portion  to  the  volume  of  business  than  is  necessary  in  the  East. 

Again,  we  have  a  large  number  of  laVjorers  who  do  not  under- 
stand the  use  of  bank  checks,  and  consequently  we  are  c-ompelled 
to  furnish  them  with  the  actual  money.  For  this  reason,  also,  it  is 
essential  that  we  should  have  a  larger  volume  of  currency.  Now, 
let  us  see  what  would  be  the  effect  on  my  State  of  this  i)roposed 
change — and  I  think  the  gentleman  from  Kansas  and  the  gentleman 
from  Colorado  and  the  gentleman  from  Nebraska  wall  find  their 
people  benefited  in  the  same  proportion  by  this  bill  as  we  will  'l)e. 
We  have  a  little  less  than  $2.1. 000, 000  invested  in  national  banks 
under  the  provisions  of  this  bill:  we  can  on  that  capital  increase 
our  currency  over  fifteen  and  a  quarter  million  dollars,  which, 
experience  has  demonstrated  and  the  testimony  of  experts  sliows 
will  be  just  as  safe  as  the  money  that  we  now  have.  With  the 
ability  of  our  banks  to  put  this  additional  amount  of  currency 
into  the  channels  of  trade  when  needed,  without  having  to  bor- 
row it  at  a  high  rate  of  interest,  they  will  become  more  inde- 
pendent, confidence  will  be  restored,  business  revived,  and  pros- 
perity assured. 

Jlr.  PENCE.  Do  you  mean  that  much  increase  in  your  na- 
tional-bank currency? 

Mr.  GRESHAM.  Yes.  I  mean  that  much  increase  of  bank 
currency.  We  now  have  very  little  bank  currency  in  proportion 
to  our  banking  capital.  It  is  too  expensive.  When  a  national 
bank  wants  to  get  permission  to  do  business  it  deposits  the  least 
amount  of  bonds  authorized  by  law  and  consequently  can  take 
out  but  a  small  amount  of  currency. 

Mr.  Chairman,  I  represent,  in  part,  upon  the  floor  of  this  House 
a  country  that  is  rapidly  growing,  and  is  bemg  settled  by  a  young, 
vigorous,  energetic,  industrious,  and  thrifty  people,  who  have 
little  else  for  their  capital  than  brawn,  sinew,  and  integrity,  and 
must  rely  upon  foreign  capital  for  aid. 

The  present  sj^stem  keeps  too  much  money  locked  up  and  lying 
idle.  We  must  remember  that  every  expense  put  upon  the  bank- 
ing institutions  of  the  country  has  to  be  borne  ultimately  by  the 
people.  We  in  the  West  and  South  who  are  clamoring  for  more 
money  want  every  facility  possible  to  induce  capital  to  come 
among  us.  Notwithstanding  the  relief  this  bill  would  afford,  we 
still  will  have  to  go  into  the  markets  of  the  world  as  borrowers. 
We  have  to  convince  those  who  have  the  money,  and  from  whose 
coffers  we  wish  to  draw  more  capital  to  help  us  develop  our  coun- 
try, that  we  can  and  will  meet  our  obligations  in  accordance  with 
the  terms  of  our  contracts.  This  confidence  we  can  never  gain 
by  advocating  "fiat  money"  or  legalizing  any  system  of  cun'ency 
that  is  not  immediately  convertible  and  at  all  times  redeemable  on 
demand  in  the  legal-tender  money  of  the  Government.     This  re- 

1746 


9 

demption  of  the  bank  notes  is  amply  provided  for  by  the  fourth 
section  of  the  bill  under  consideration. 

Mr.  HALL  of  Minnesota.  You  are  referring  now  entirely  to 
national  banks. 

Mr.  GRESHAM.  Yes,  sir;  I  am  not  discussing  anything  but 
national  banks. 

UNIFORMITY. 

The  peojile  of  this  country  have  become  used  to  a  uniform  na- 
tional-bank currency,  and  would  not,  in  my  opinion,  be  willing 
to  part  with  it.  They  do  not  have  to  examine  it  when  they  go 
from  one  part  of  the  country  to  another.  They  want  something 
that  will  circulate  everywhere,  just  as  the  gold  dollar  does:  money 
that  they  do  not  have  to  examine  and  find  out  first  where  it  was 
issued  and  then  inquire  whether  the  bank  which  issiied  it  is  sol- 
vent or  not.  A  uniform  currency  is  essential,  and  in  this  partic- 
ular the  national-bank  system  has  been  a  great  success,  and  1  hold 
that  wherever  experience  has  demonstrated  a  plan  to  be  a  success 
it  is  the  part  of  statesmanship  to  avail  ourselves  of  it  and  not  to 
discard  it  for  something  that  is  at  least  less  certain.  The  pending 
measure  does  not  change  existing  laws  in  regard  to  uniformity  of 
bank  currency.  But,  having  said  this  much,  it  is  all  that  I  can 
say  in  behalf  of  the  present  banking  system. 

Let  us  now  examine  the  imperfections  of  the  present  system  and 
the  remedies  proposed  by  the  pending  measure. 

TOO  EXPENSIVE. 

First.  The  present  banking  system  is  too  expensive.  To  illus- 
trate: Parties  desiring  to  go  into  a  banking  business  ^vith  a  capi- 
tal of  $100,000  are  required  under  existing  laws  to  deposit  with  the 
Government  $35,000  in  United  States  bonds  before  they  can  obtain 
a  license  to  commence  business.  They  are  compelled  to  go  into 
the  market  and  buy  these  bonds,  for  which  they  have  to  pay.  say, 
a  premium  of  14  per  cent.  This  would  make  the  $25,000  in  bonds 
cost  them  $28,500,  which,  deducted  from  the  original  capital  of 
$100,000,  leaves  cash  on  hand  $71 ,500.  The  $25,000  in  bonds  are  de- 
posited with  the  Government  and  the  Comptroller  issues  to  the  bank 
notes  thereon  to  the  amount  of  90  per  cent  of  the  face  value  of  the 
bonds,  which  is  $22,500.  and  then  deducts  from  tliat  amount  5  per 
cent  for  the  redemption  fund,  which  would  equal  in  this  case 
$1,125,  so  that  the  amount  of  notes  received  from  the  Government 
would  be  $21,375,  for  which  the  bank  has  paid  in  cash  $28,500. 
The  $21,375  in  notes  received,  added  to  the  $71,500  of  the  original 
capital,  would  enable  the  bank  to  open  its  doors  and  commence 
business  on  just  $92,875. 

Under  the  proposed  plan,  parties  desiring  to  establish  a  bank 
with  a  like  amount  of  capital  ($100,000)  can  take  $22,500  thereof 
in  greenbacks  or  Treasury  notes,  and  deposit  the  same  with  the 
Treasurer  and  receive  back  from  the  Government  not  to  exceed 
$75,000  in  bank  notes.  This  $75,000,  added  to  the  $77,500  of  its 
capital  stock  remaining  after  deducting  the  $22,500  of  legal  ten- 
der and  Treasury  notes  paid  into  the  Treasury  as  a  gviaranty  fund, 
makes  $152,500  as  the  amoimt  of  cash  on  hand  that  the  bank  would 
have  when  it  commences  business,  as  against  $92,875  under  exist- 
ing laws;  in  one  case  their  working  capital  is  diminished  $7,125, 
and  in  the  other  it  is  increased  $52,500.  As  I  have  already  dem- 
1746 


10 

onstratecl,  this  additional  currency  would  be  as  safe  as  that  in  use 
under  any  banking  system  in  the  world. 

ELASTICITY. 

Elasticity  in  the  volume  of  currency  is  provided  for  by  this 
bill.  Under  present  conditions  the  greater  the  demand  for  an  in- 
creased supply  of  currency  the  more  difi&cult  it  is  to  obtain. 
Suppose  a  bank  wants  currency — it  is  demanded  by  its  customers 
and  the  business  necessities  of  the  country — and  it  goes  to  the 
Treasury  to  get  it.  Why,  it  takes  more  money  to  pay  for  the 
bonds  to  be  deposited  in  the  Treasury  to  enable  it  to  secure  cur- 
rency than  such  currency  received  by  the  bank  would  amount 
to.  The  result  is,  if  it  has  to  buy  the  bonds  it  will  not  do  so,  and 
therefore  can  not  get  any  increase  of  currency.  It  may  possibly 
be  asked  why  it  is  that  the  banks  which  have  bonds  already  on 
deposit  do  not  draw  out  currency  to  the  extent  of  the  amount 
authorized  by  the  law.  The  answer  is  simply  l)ecause  the  banks 
that  have  not  taken  out  the  circulation  to  which  they  are  entitled 
do  not  need  it.  They  can  not  keep  it  at  interest  and  the  expense 
is  too  great  to  keep  it  in  their  vaults.  Their  money  is  now  lying 
idle  and  they  do  not  want  more  currency.  But  you  do  not  find 
that  condition  in  my  country.  Every  dollar  that  the  banks  are 
entitled  by  law  to  take  out  on  the  bonds  they  have  deposited  in 
the  Treasury  is  in  circulation. 

Mr.  WALKER.     And  they  could  circulate  thousands  more. 

Mr.  GrRE.SHAM.  Yes,  we  could;  and  if  you  will  give  us  a  good 
banking  system  we  will  do  it. 

Mr.  Chairman,  I  say  our  bank  currency  is  not  elastic  because  it 
can  not  be  increased  when  an  emergency  arises  or  when  the  wants 
of  trade  demand  it.  This  bill  seeks  to  remedy  this  e%al.  It  pro- 
vides for  an  increase  in  the  vohime  of  currency  when  the  business 
wants  of  the  country  demand  it  without  the  expense  and  delaj' 
incident  to  obtaining  it  under  existing  laws. 

The  advantages  of  an  elastic  system  of  currency  has  been  demon- 
strated in  Canada  and  Germany,  where  there  has  never  been  a 
financial  panic  or  a  currency  stringency  since  the  establishment 
of  their  respective  banking  systems.  The  Bank  of  England,  with- 
out such  a  provision  in  its  charter,  has  on  three  occasions  since 
1844,  to  avoid  closing  its  doors,  been  comi)elled  to  issue  its  notes 
without  authority  of  law. 

The  i)ower  conferred  by  the  French  Government  upon  the  Bank 
of  France,  immediately  after  the  Franco-Prussian  war,  to  increase 
its  note  issue  enabled  it  to  assist  the  Frencli  people  in  meeting 
promptly  the  German  indemnity  and  to  siipply  an  adeqviate  and 
safe  currency  for  the  demands  of  trade.  Thus  the  experience  of 
the  banking  systems  of  the  greatest  commercial  nations  in  the 
world  demonstrates  the  importance  of  elasticity  in  any  system  of 
currency. 

We  must  act  upon  this  bill  if  we  expect  this  Congress  to  give 
the  people  any  relief  from  tlie  evils  of  the  present  national-bank 
system.  Let  us  perfect  it  by  amendments  and  tlien  pass  it.  The 
question  of  elasticity  in  the  currency  \vill  not  avail,  in  my  opinion, 
verj^  much  in  my  country,  because  the  demand  for  capital  is  so 
gi'eat  that  most  of  our  banks  will  use  their  75  per  cent  at  once. 
But  the  people  in  the  East  will  not  do  this.  They  will  not  take 
1746 


11 

out  the  full  amount  of  currency  to  which  they  are  entitled  until 
they  can  use  it  profitably,  which,  from  the  statements  made  by 
the  representatives  of  Eastern  banks  before  the  Committee  on 
Banking  and  CuiTency,  they  could  not  now  do. 

Should  a  stringency  arise,  even  though  our  banks  may  not  have 
authority  to  issue  any  more  notes  under  the  provision  of  this  law, 
if  the  banks  in  the  East  can  iise  it  profitably  they  will  take  it  out 
and  put  it  in  ctrculation.  In  this  way  we  can  increase  the  volume 
of  currency  just  so  long  as  the  wants  of  trade  demand  it.  As 
soon  as  money  can  not  find  profitable  investments  and  begins  to 
accumulate  and  lie  idle  in  the  banks — which  I  hope  it  will  not  do 
in  my  country  for  a  long  time  to  come — so  that  it  can  not  be  used 
in  the  channels  of  commerce  to  advantage,  it  will  go  back  to  the 
bank  that  issued  it  for  redemption  and  be  retired;  when  it  is 
needed  it  will  be  reissued  and  go  into  circulation  again,  just  as  is 
done  in  Canada. 

This  bill  provides  for  an  elastic  currency  to  the  extent  of  nearly 
61  per  cent  of  the  national-bank  capital  of  this  country.  If  this 
does  not  furnish  a  sufficient  volume  of  safe  currency — a  currency 
redeemable  in  legal-tender  money  on  demand — I  ask  how  and 
when  it  is  possible  for  us  to  get  the  relief  the  people  are  asking? 

Mr.  PENCE.  Will  the  gentleman  allow  me  to  ask  him  a  ques- 
tion? 

Mr.  GRESHAM.     Certainly. 

Mr.  PENCE.  Is  it  not  your  opinion  that  under  this  bill,  either 
the  original  Carlisle  bill  or  the  substitute  proposed  by  the  gentle- 
man from  Illinois  [Mr.  Springer]  ,  parties  will  take  out  State- 
bank  charters? 

Mr.  GRESHAM.  I  am  not  talking  about  State-bank  charters 
at  all.    I  have  not  come  to  that. 

Mr.  PENCE.  I  know  that.  I  have  been  waiting  for  the  gen- 
tleman to  get  to  the  question  of  State  banks. 

Mr.  GRESHAM.  Wait  until  I  get  through  discussing  national 
banks. 

Mr.  PENCE.  Is  it  not  your  opinion  that  under  the  original 
bill,  or  the  substitute,  parties  will  take  out  State-bank  charters 
rather  than  national-bank  charters? 

Mr.  GRESHAM.     No,  sir;  in  m}'  judgment  they  will  not. 

Mr.  HENDERSON  of  Illinois.     I  hope  not. 

Mr.  GRESHAM.  I  said  our  present  banking  system  did  not 
have  elasticity  and  have  tried  to  demonstrate  it. 

COMPULSORY  RESERVE. 

Now,  in  regard  to  a  compulsory  reserve.  I  listened  to-day 
with  interest  to  the  remarks  of  the  gentleman  from  New  York 
[Mr.  Hendrix]  ,  in  which  he  advocated  retaining  the  provisions 
of  the  law  requiring  the  banks  in  certain  cities  to  keep  a  reserve 
of  35  per  cent  of  their  deposits  and  those  of  other  sections  15  per 
cent.  The  operation  of  this  law  results  in  a  profit  to  the  banks 
in  the  reserve  cities  at  the  expense  of  the  banks  in  other  sections 
of  the  coimtry.  At  the  very  time  the  banks  want  to  iise  this  fund 
for  the  relief  of  their  customers  they  are  prohibited  from  doing  so. 

Under  the  provisions  of  this  bill  compulsory  reserves  are  elimi- 
nated from  the  law,  but  it  is  not  supposed  that  the  banks  will  not 
keep  reserves,  for  experience  shows  that  every  well -managed  bank 

1746 


12 

in  this  country,  though  there  is  noconipulsory  law  npon  the  sub- 
ject, keeps  an  average  reserve  larger  than  the  amount  re<inii-e(:l  by 
our  laws.  All  well-managed  banks  of  the  world  keep  a  reserve, 
but  it  is  done  by  reason  of  the  fact  that  their  business  exp.erience 
teaches  them  that  it  is  right:  but  when  the  time  comes  to  use  it 
they  can  do  so,  and  protect  themselves  and  their  customers  with- 
out being  siibjected  to  the  possibility  and  probability  of  being  put 
in  the  hands  of  receivers  and  having  their  cht;rters  revoked. 
Therefore  I  think  we  can  safely  trust  to  the  banks,  as  they  are 
trusted  in  all  other  civilized  countries,  to  say  how  much  reserve 
they  will  keep. 

REDUNDANCY  OF  CURRENCY. 

The  people  of  the  East  are  contending  that  there  is  a  redun- 
dancy of  currency;  while  this  is  not  true  of  much  the  largest  portion 
Oi  our  country,  it  is  doubtless  true  in  the  great  moneyed  centers 
through  which  the  commerce  of  our  country  passes;  there  busi- 
ness men  who  handle  this  commerce  and  have  to  settle  our  bal- 
ances in  gold  see  and  realize  most  clearly  the  dangers  that  imperil 
our  credit  by  reason  of  the  Government  leaving  in  circulation 
$500,000,000  of  promises  to  nay  on  demand.  The  credit  of  a  na- 
tion, like  that  of  an  individual,  is  based  upon  two  things:  First, 
the  belief  that  it  has  the  ability  to  pay  its  obligations;  and,  next, 
confidence  in  its  honestj'  and  integrity  of  puri^ose  to  meet  them 
in  accordance  with  its  contracts.  Take  from  a  nation  either  of 
these  requisites,  destroy  confidence  in  its  ability  to  pay  or  its  in- 
tention to  do  so,  and  you  sap  the  foundations  npon  Avhich  its  credit 
is  based.  How  our  national  credit  is  being  affected  by  these 
$.■300,000,000  of  Government  demand  notes  now  outstanding  let 
the  report  of  the  Secretary  of  the  Treasury  answer.     He  says: 

Since  the  resumption  of  specie  payments,  on  the  1st  day  of  January,  1879, 
United  States  legal-tender  notes  and  Treasury  notes  issiied  under  the  act  of 
July  14, 1890,  have  been  redeemed  in  gold  to  the  amount  of  $260.()f)0,000,  and  all 
the  notes  so  redeemed  have  been  reissued  and  are  uuw  outstanding.  They 
are  a  constant  menace  to  the  gold  reserve,  and  no  scheme  of  financial  reform 
can  be  complete  or  effectual  which  does  not  provide  at  least  for  their  gradual 
elimination  from  our  currency  system.  To  retain  tliem  as  a  part  of  the  cur- 
rency of  the  people  and  refuse  to  redeem  them  in  sta;idai-d  coin  on  demand, 
would  be  repudiation  in  its  most  odious  form  because  the  larger  part  of 
those  notes  were  forced  into  the  circulation  by  thcGrovernment  at  a  time  and 
under  circumstances  which  justified  the  most  implicit  reliance  upon  its  good 
faith.  On  the  other  hand,  to  continue  their  redemption  and  reissue  under 
present  conditions  endangers  the  entire  volume  of  our  currency,  discredits 
the  obligations  of  the  Government  and  people,  increases  the  pubUc  debt,  and 
seriously  embarrasses  the  administration  of  our  financial  affairs. 

As  was  said  a  little  while  ago  by  the  gentleman  from  Maine 
[Mr.  Dingley]  ,  we  are  in  the  condition  in  which  the  balance  of 
trade  is  in  our  favor,  and  still  there  is  a  constant  drain  of  gold 
from  this  countrj'.  During  the  last  two  years  our  exports  of  mer- 
chandise, including  silver  bullion,  exceeded  our  imports  by  .'^:300,- 
5'J4,458.  In  addition  to  this  amount  §91,069,040  of  gold  was 
shipped  out  of  the  country  to  meet  the  demands  of  our  creditors. 
Why  this  extraordinary  demand  by  foreign  creditors  to  realize 
upon  American  securities?  It  was  because  they  believed  that  if 
we  adopted  the  financial  policy  advocated  by  quite  a  large  number 
of  the  American  people,  the  time  was  not  far  distant  when  we 
would  be  unable  to  meet  our  obligations  in  gold,  and  they  wanted 
to  draw  their  money  from  this  country  before  we  were  forced  into 
such  a  position. 

1746 


13 

There  is  no  use  in  slintting  our  eyes  to  these  facts.  I  want  to 
say  to  my  Soiithern  and  Western  colleagues  that  whenever  confi- 
dence in  our  securities  is  impaired  we  are  the  first  to  suffer.  Let 
our  foreign  creditors  place  upon  the  markets  of  this  country  at 
once  $500,000,000  of  American  securities — not  necessarily  Govern- 
ment bonds,  because  I  believe  comparatively  few  of  those  are  held 
abroad,  but  railroad  bonds,  municipal  bonds,  bonds  of  private 
corporations — and  demand  their  payment  in  gold,  the  loss  to  the 
American  jieople  would  be  incalculable.  Nearly  all  our  bonds 
held  abroad  have  in  them  a  clause  of  this  kind:  Thirty  years  (or 
whatever  the  time  may  be)  after  date  we  promise  to  pay  so  many 
dollars  in  American  gold  of  present  weight  and  fineness. 

If  you  will  examine  the  bonds  issued  throughout  the  country 
you  will  find  nearly  every  one  of  them  containing  a  similar  pro- 
vision. Whenever  these  securities  are  thrown  into  the  market  of 
Wall  street,  it  is  compelled  to  protect  them  to  the  utmost  of  its 
ability.  Similar  securities  are  held  largely  by  banking  and  other 
moneyed  institutions  in  this  country,  and  if  they  could  not  find  a 
market  for  them  they  would  soon  find  themselves  bankrupt. 

We  of  the  South  and  West,  who  have  not  accumulated  a  sur- 
plus of  capital,  are  compelled  to  look  to  the  moneyed  centers  of  the 
coimtry  for  aid  in  moving  our  crops.  It  is  absolutely  essential  that 
we  should  borrow  money  for  this  purpose.  Our  banks,  after  ex- 
haiTsting  their  capital,  which  is  very  limited,  take  the  securities  that 
their  customers  have  deposited  with  them,  carr}^  them  to  Wall 
street,  where  they  are  rediscounted.  Whenever  a  drain  is  made 
by  our  foreign  creditors,  as  before  stated,  upon  the  banks  of  Wall 
street,  they  are  frequently  comj^elled  to  refuse  accommodations  to 
our  banks  and  to  demand  payment  of  the  obligations  they  have  dis- 
counted. 

Our  banks  are  then  forced  to  call  upon  their  debtors  to  pay, 
and  in  times  of  stringency  such  as  we  have  had  it  is  impossible 
for  them  to  borrow  the  money  or  to  realize  upon  their  property, 
and  they  are  forced  into  bankruptcy.  Thus  it  is  that  we,  being 
a  debtor  class,  are  the  first  to  be  forced  to  the  wall  when  our  for- 
eign creditors  become  alarmed  and  demand  the  payment  of  their 
American  securities.  Hence  we  are  more  interested  in  maintain- 
ing the  credit  of  this  Government  than  the  people  of  any  other 
section  of  the  Union. 

The  $500,000,000  of  Government  demand  notes  are  being  used 
by  the  brokers  of  the  world  to  withdraw  the  gold  from  the  Treas- 
ury and  to  force  the  Government  to  sell  its  bonds  to  replenish  the 
Treasury  gold. 

I  say,  therefore,  that  we  must  devise  some  means  by  which  this 
unlimited  power  to  extract  from  the  Treasury  its  gold  and  to  force 
the  sale  of  bonds  shall  be  stopped.  This  bill  provides  a  remedy 
(not  an  adequate  one,  in  my  judgment,  but  I  hope  it  will  be 
amended  and  improved  in  this  particular).  It  requires  that  30 
per  cent  of  the  circulating  notes  shall  be  deposited  with  the  Sec- 
retary of  the  Treasury  in  legal-tender  notes.  This  will  take  out 
of  circulation,  according  to  the  estimate  of  the  Secretary  of  the 
Treasury,  two  hundred  and  tweifty-five  millions  of  these  demand 
notes  if  all  the  banks  avail  themselves  of  the  provisions  of  the  act. 

Then  there  should  be  inserted  in  the  bill  a  clause  authorizing 
the  sale  of  a  limited  amount  of  gold  bonds,  bearing  not  exceeding 

1746 


14 

3  per  cent  interest,  for  the  purpose  of  retiring  these  obligations  in 
the  manner  suggested  by  the  S(M'i-etary  of  the  Treasury  and  as 
repeatedly  reconiniended  l)y  the  President. 

Mr.  PENCE.     You  mean  retiring  the  legal-tender  notes? 

Mr.  GRESHAM.  Yes.  sir.  But  I  want  coupled  \\'ith  that  the 
authority  for  our  lianks  to  increase  their  circulating  notes,  as  pro- 
A'ided  for  in  this  bill.  Tlien  we  will  have  an  increase  of  a  safe  and 
convertible  currency,  and  the  Government  will  go  out  of  the 
banking  business. 

I  have  heard  it  stated  to-day  that  in  order  to  protect  our  gold 
reserve  Ave  must  increase  our  revenues,  and  I  inferred  from  the 
manner  in  which  it  was  stated  that  the  only  method  recognized  by 
the  speaker  as  practicable  for  this  imrpose  was  to  restore  a  high, 
protective  tariff.  Now,  the  revenues  of  this  Government  are  de- 
pendent upon  the  volume  of  trade  and  the  facility  with  which  it 
is  moved.  If  you  stop  the  wheels  of  commerce,  you  may  put  on 
the  tariff  as  much  as  you  please  and  you  will  not  collect  the  neces- 
sary revenue.  On  the  other  hand,  set  the  wheels  of  industry  in 
motion,  let  the  currents  of  trade  flow  without  obstruction,  and 
under  existing  laws  you  will  have  revenue  enough  to  meet  the  or- 
dinary expenses  of  the  Government.  But  with  the  financial  con- 
dition now  confronting  us  we  can  not  realize  that  result  under 
the  present  tariff  law  or  any  other.  Give  us  a  good  banking  sys- 
tem, give  us  proper  machinery  by  which  the  commerce  of  the 
country  can  be  handled,  and  business  will  revive,  and  when  it 
does  the  revenue  will  increase  and  we  will  have  enough  money  in 
the  Treasury  to  meet  our  obligations. 

Now,  how  is  this  gold  taken  out?  This  Government  says  to  the 
world.  "I  will  maintain  my  paper  on  a  parity  Avith  gold,  and  when- 
ever it  is  presented  at  my  counters  I  will  redeem  it  in  gold."  As 
was  said  to-day  by  the  gentleman  from  New  York  [Mr.  Hendrix], 
there  is  not  a  country  in  the  world  that  offers  such  inducements 
for  the  A\dthdrawal  of  its  gold.  You  advertise  to  the  world  ex- 
actly what  you  will  sell  it  for  and  furnish  the  medium  with  which 
to  pay  for  it.  Whenever  the  Bank  of  England  wants  to  stop  the 
drain  of  gold  it  raises  its  rate  of  discount  to  such  a  price  as  to  pre- 
vent its  export  at  a  profit. 

Mr.  BROSIUS.     Will  the  gentleman  allow  a  question? 

Mr.  GRESHAJVI.     Certainly. 

Mr.  BROSIUS.  Do  you  mean  to  say  that  the  Bank  of  England 
ever  refuses  to  redeem  its  notes  in  gold  when  presented  for  re- 
demption? 

Mr.  GRESHAM.    No,  sir;  it  always  redeems  them  in  gold. 

Mr.  BROSIUS.     Then  I  misunderstood  the  statement. 

Mr.  GRESHAM.  It  always  redeems  its  notes;  but  if  you  want 
to  biiy  gold  from  the  Bank  of  England  for  the  purpose  of  export- 
ing it,  and  it  does  not  want  the  gold  to  leave  the  countrj',  it  will 
raise  its  rate  of  discount.  You  can  buy  from  it  gold  coin  or  bul- 
lion, which  you  can  not  do  from  oiir  Treasiiry.  The  same  is  the 
case  in  Germany.  When  you  go  to  the  Bank  of  Germany  for  gold, 
and  it  does  not  wantit  withdrawn,  it  ]iuts  up  the  i^rice  of  discount; 
and  if  that  does  not  accomplish  the  desired  result  then  an  intima- 
tion to  a  German  subject  that  the  imperial  bank  does  not  want 
the  gold  taken  from  its  vaults  is  sufficient,  and  he  looks  elsewhere. 
The  Bank  of  France,  when  it  desires  to  retain  its  gold,  raises  the 
174« 


15 

price  and  puts  a  premimn  on  it  and  keeps  it.  When  Russia,  Aus- 
tria-Hungary, or  any  other  nation  wants  gold  its  brokers  do  not  look 
to  England,  Germany,  and  France  for  the  supply,  but  they  come 
to  this  country,  because  they  know  they  can  get  it  at  a  fixed  price, 
and  if  the  amount  in  the  Treasury  is  not  sufficient  to  supply  their 
wants  they  can  easily  force  the  Government  to  sell  its  bonds  and 
raise  the  amount  tliey  may  require,  as  we  furnish  them  the  me- 
dium by  which  they  can  withdraw  it  from  the  Treasury.  Just 
so  long  as  we  continue  to  sell  bonds  to  raise  gold  to  pay  green- 
backs and  Treasury  notes  that  are  reissvied  and  put  back  in  cir- 
culation we  will  be  looked  to  by  the  balance  of  the  world  as 
the  goose  from  which  to  draw  their  supply  of  golden  eggs. 
Such  a  policy  will  inevitably  result  in  the  increase  of  our 
bonded  debt,  the  impairment  of  our  national  credit,  and  the  with- 
drawal of  foreign  capital  from  our  country.  Let  us  meet  the 
issue  and  authorize  tlie  Executive  to  sell  gold  bonds  bearing  a 
low  rate  of  interest  for  the  i)urpose  of  pajdng  and  canceling  this 
"fiat  money  "as  it  is  paid  into  the  Treasxiry,  establish  a  good 
banking  system  under  Government  supervision,  compel  the  banks 
to  supply  the  currency  and  gold  demanded  by  the  wants  of  trade, 
and  let  the  Government  retire  from  the  banking  business. 

BRANCH  BANKS. 

There  is  one  other  provision  I  would  like  to  see  engrafted  into 
this  bill.  It  is  that  national  banks  with  a  capital  of  not  less  than 
$1,000,000  shall  have  the  aiithority,  under  such  rules,  regulations, 
and  restrictions  as  may  be  prescribed  by  the  Comptroller  of  the 
Currency  to  establish  branch  banks  both  in  this  country  and 
abroad.  Go  to-day  to  the  largest  commercial  city  on  this  conti- 
nent, and  if  you  want  to  buj^  a  cargo  of  coffee  in  Rio  or  of  tea  in 
China  you  are  compelled  to  make  your  deposits  in  London  before 
you  can  draw  your  bills  of  exchange  in  payment  therefor.  The 
result  is  that  our  foreign  exchanges  are  handled  by  foreigners  at 
an  anniTal  loss  to  the  people  of  this  country  of  millions  of  dollars. 

Not  only  is  our  exchange  drawn  through  foreign  banks,  but  our 
commerce  is  carried  in  foreign  vessels.  Let  me  dictate  the  rate  of 
freight  and  of  exchange  that  a  nation  must  pay  upon  its  commerce 
and  I  will  pocket — at  the  expense  of  the  producer — the  profits  on 
the  commodities  transported. 

We  will  sooner  or  later  carry  our  foreign  commerce  in  Ameri- 
can bottoms,  and  to  facilitate  its  quick  and  economical  handling 
we  should  authorize  the  establishment  of  branch  banks  in  foreign 
countries.  Give  to  the  banks  of  this  country  the  authority,  and 
they  will  establish  foreign  branches,  as  the  banks  of  Great  Britain 
have  done. 

Mr.  WALKER.     Does  the  Bank  of  England  have  branch  banks? 

Mr.  GRESHAM.  It  has  in  England.  I  do  not  know  whether 
the  Bank  of  England  has  foreign  branches  or  not,  but  other  Eng- 
lish banks  have. 

Mr.  SPRINGER.  The  Scotch  Bank  has  branch  banks,  but  not 
the  Bank  of  England. 

Mr.  GRESHAM.  The  banks  of  England  have  both  foreign  and 
domestic  branch  banks.  I  believe  the  Bank  of  England  only  has 
branches  within  the  Kingdom. 

Mr.  SPRINGER.     There  are  branch  banks  in  England  of  the 
Bank  of  England,  biat  not  abroad. 
1746 


16 

Mr.  GRESHAM.  But  the  banks  Jn  England  do  establish  them 
abroad. 

Mr.  WARNER.  The  Bank  of  Canada  has  a  branch  bank  in 
New  York  City. 

Mr.  GRESHAJM.  Now,  Mr.  Chairman,  I  say  that  the  time  has 
come  when  our  banks  should  aid  in  building  up  our  foreign  com- 
merce. 

Mr.  WARNER.  I  will  say  that  the  other  banks  to  which  ref- 
erence has  been  made — the  great  banks  of  England,  not  the  Bank 
of  England,  but  banks  of  England,  Scotland,  and  Ireland — all 
have  branches,  not  merely  in  different  parts  of  the  country  in 
which  their  main  office  is  situated,  but  in  the  city  of  New  York 
and  on  the  Continent,  and,  I  believe,  in  every  part  of  the  world. 

Mr.  GRESHAINI.  The  time  has  come  when  we  must  find  a  for- 
eign market  for  our  surplus  products,  and  in  doing  so  we  should 
let  the  American  go  abroad  with  as  few  trammels  and  as  many 
privileges  as  possible.  Give  our  merchants  the  opportunity  to 
compete  upon  an  equal  footing  with  the  balance  of  the  world  and 
they  will  take  care  of  themselves.  But  let  me  say  to  the  gentle- 
men on  the  other  side  that  we  must  change  our  shipping  laws. 
We  can  never  build  up  our  merchant  marine  under  existing  re- 
strictive laws.  I  will  illustrate  this  by  an  incident  that  came 
under  my  observation  within  the  last  two  years. 

The  RejTnershotfer  Brothers  of  Galveston,  with  a  view  of  facil- 
itating their  flour  trade  with  Cul)a  and  Porto  Rico,  were  desirous 
of  getting  two  American  steamers  because  they  could  engage  in 
the  coastwise  trade  between  Galveston,  New  Orleans,  and  Mo- 
bile on  their  voj'ages  to  and  from  Cufea  and  Porto  Rico,  which  the 
foreign  ships  now  engaged  in  this  trade  could  not,  under  our 
laws,  do. 

Plans  and  specifications  for  two  steam  vessels  of  the  capacity  of 
about  one  thousand  gross  tons  each  were  drawn  by  marine  archi- 
tects and  submitted  to  shipbuilders  in  this  covantry  and  abroad. 
The  cheapest  bid  received  was  from  the  Clyde,  $r).5,UU0  for  each 
vessel.  The  cheapest  bid  from  any  American  shipbuilder  was 
§9(),000  each.  Now.  is  it  possible  for  an  American  vessel  that  cost 
§96,000  to  go  upon  the  high  seas  and  compete  for  the  commerce  of 
the  world  with  a  vessel  equally  as  good  that  cost  only  $55,000? 
Never.  We  must  remove  the  protective  duties  that  produce  such 
a  difference  in  cost. 

Mr.  Chairman,  I  regret  that  I  wiU  be  unable  to  discuss  other 
provisions  of  this  bill,  particularly  the  one  in  regard  to  State 
banks;  but  my  time  is  about  to  expire.  Let  me,  therefore,  in 
conclusion  say,  if  the  bill  be  amended  as  I  have  suggested,  and 
the  bonds  as  well  as  legal-tender  notes  are  made  the  basis  of  our 
national-bank  currency,  we  will,  I  believe,  have  a  banking  system 
that  provides  a  uniform  currency,  insures  safety  to  the  note 
holder,  augments  the  security  of  the  depositor,  allows  an  elastic 
volume  of  currency  commensurate  with  the  wants  of  trade,  and 
that  requires  its  notes  to  be  redeemed  in  gold  and  silver  legal-ten- 
der money,  thus  furnishing  to  the  people  of  this  country  what  they 
want,  a  greater  volume  of  cheaper  currency,  convertible  by  the 
banks  on  demand  into  legal-tender  coin.     [Applause.] 

[Here  the  hammer  fell.] 
1746 

o 


MONETARY   CONFERENCE. 


SPEECH 


OF 


HON.  CHARLES  H.  GPiOSVENOU, 

OF    OHIO, 


HOUSE   OF  EEPEESEIl^TATIYES, 


Monday,   March  4,  1895. 


WASHINGTON. 
1895. 


SPEECH 

OF 

HON.  CHATvLES  H.  GROSVENOK. 


The  House  having  under  consideration  the  bill  (H.  R.  3860)  for  the  relief  of 

the  estate  of  Holmes  Sells,  deceased — 

Mr.  GROSVENOR  said: 

Mr.  Speaker:  One  of  the  most  noticeably  unpleasant  features  of 
the  closing  hours  of  this  notable  Congress  has  been  the  attack  upon 
the  appointment  of  a  monetary  commission  to  confer  with  the 
great  nations  of  Europe  on  the  important  question  of  bimetallism 
in  our  currency,  which  came  with  persistence  and  bitterness  from 
the  Representatives  of  a  small  party  on  the  floor  of  this  House.  I 
tliink  it  may  be  said,  Mr.  Speaker,  that  the  promise,  or  perhaps  in 
better  phrase,  the  prophetic  utterances  which  were  repeated  in 
both  branches  of  Congress  during  the  discussion  of  the  currency 
question  in  1893  have  been  made  good  by  the  signs  of  the  times. 

It  was  said  over  and  over  again  that  the  repeal  of  the  purchas- 
ing clause  of  the  Sherman  Act  would  tend  indirectly  but  power- 
fully to  bring  about  bimetallism  in  the  whole  world;  and  those 
statements  have  met  with  complete  and  successful  fulfillment. 

I  believe  that  the  repeal  of  the  purchasing  clause  of  the  Sher- 
man law  did  more  than  any  other  one  legislative  act  to  bring 
about  the  condition  which  we  now  have,  and  which  seems  to  ren- 
der it  possible,  and  indeed  very  hopeful,  that  bimetallism  by  com- 
mon agreement  is  to  come;  that  we  are  to  have  a  common,  con- 
current settlement  of  this  mighty  question,  to  be  participated  in 
by  all  the  great  nations  of  the  earth,  and  the  establishment  in  that 
way  of  bimetallism  in  this  country  upon  a  sure  basis,  and  one 
which  never  could  have  taken  place  by  any  means  other  than  the 
common  action  of  all  these  gi-eat  nations. 

And  now,  Mr.  Speaker,  I  regret  that  in  this  auspicious  hour, 
when  the  hopes  of  good  men,  irrespective  of  party,  are  raised  high 
in  the  anticipation  that  this  dark  cloud  of  financial  complication 
and  embarrassment  which  has  overshadowed  us  is  to  pass  away, 
when  we  can  even  see  the  light  of  a  brighter  day  breaking  through 
the  clouds,  it  is,  I  say,  to  be  regretted  that  the  representatives  of 
this  party,  small  in  numbers  it  is  true,  in  this  House,  and,  thank 
God,  to  be  much  smaller  in  the  next  House,  and  yet  representing 
a  large  body  of  the  citizens  of  the  United  States,  should  have  been 
unpatriotic  enough  and  so  nnwase  as  to  have  sent  abroad  to  the 
people  of  the  world  the  discouraging  utterances  which  have  been 
made  on  this  floor.  When  all  were  struggling  in  a  common  cause. 
Republicans  and  Democrats  alike,  the  representatives  of  this  po- 
litical faction  have  notified  the  people  of  foreign  countries  that 
the  American  people  mean  nothing  by  this  movement.  They  de- 
clare, in  so  far  as  they  may  speak  for  the  American  people,  that  that 
people  have  no  confidence  whatever  and  no  faith  nor  hope  nor 
trust  in  the  outcome  of  this  proposed  conference.  It  is  given  out 
2  1898 


that  it  is  a  mere  makeshift,  a  mere  proposition  to  kill  time,  and 
that  no  sincere  purpose  exists  to  bring  about  the  longed-for  re- 
sult. 

Mr.  Speaker,  when  the  great  apostle  of  the  new  dispensation 
visited  some  of  the  cities  of  Asia,  then  in  the  civilized  portion  of 
the  world,  and  preached  the  doctrine  of  his  religion,  it  appeared 
that  he  made  with  great  force  the  appeals  of  his  eloquence  and 
logic  against  the  great  Diana,  the  idol  of  certain  of  the  Ephesians, 
and  the  power  of  superstition  about  her  was  being  threatened  to 
its  fall.  And  there  was  in  one  of  the  cities  a  certain  craftsman, 
Demetrius  by  name,  who  carried  on  a  little  silversmith  shop  in  one 
of  the  by-streets  of  that  city;  and  he  and  a  few  artisans  and  curb- 
stone peddlers  sold  little  trinkets  that  were  used  in  the  worship  of 
Diana.  They  were  makers  of  shrines,  and  of  the  small  affairs  that 
went  to  decorate  those  places  of  idolatrous  worship;  and  Deme- 
trius gathered  together  his  fellow  peddlers  and  tinkers  and  sent 
up  a  voice  protesting  against  the  preaching  of  Paul  and  his  asso- 
ciates, declaring  that  there  was  danger  tliat  it  would  overthrow 
the  supremacy  of  Diana;  and  they  said: 

Sirs,  ye  know  that  by  this  craft  we  have  our  wealth. 

Moreover,  ye  see  and  hear,  that  not  alone  at  Ephesus,  but  almost  through- 
out all  Asia,  this  Paul  hath  persuaded  and  turned  away  much  people,  saying 
that  they  be  no  gods,  which  are  made  with  hands. 

So  that  not  only  this  our  craft  is  in  danger  to  be  set  at  naught;  but  also 
that  the  temple  of  the  great  goddess  Diana  should  be  despised,  and  her 
magnificence  should  be  destroyed,  whom  all  Asia  and  the  world  worshippeth. 

In  other  words,  they  firmly  believed  that  if  Diana  was  over- 
thrown they  would  be  out  of  a  job,  and  would  be  no  longer  per- 
mitted to  stand  on  the  sti-eet  corners  and  peddle  shrines  and 
trinkets. 

Mr.  Speaker,  if  this  monetary  conference  shall  be  a  success,  as 
all  good  people  in  this  country  hope  and  pray  and  trust  in  the 
wisdom  of  Almighty  God  it  may  be,  and  as  they  believe  it  will  be, 
in  the  patriotism  of  th,e  American  people,  there  will  be  a  number 
of  gentlemen  out  of  a  job.  [Laughter  and  applause.]  They  will 
be  no  longer  able  to  stand  on  the  street  corners  selling  trinkets, 
the  political  bric-a-brac  they  represent.  Let  their  idol  once  fall, 
and  their  occupation  is  gone. 

I  will  not  impugn  the  motives  of  any  gentleman;  but  when  I 
hear,  amid  the  great  acclaim  of  the  American  people  to-day,  hope- 
ful and  joyous  in  this  behalf,  the  piping  voice  of  discord  offering 
obstruction  and  discontent  in  every  direction  and  prophesying 
dire  evils  to  follow,  I  am  led  to  believe,  as  I  do  believe,  that  if  a 
number  of  these  so-called  leaders  of  this  Populistic  faction  could 
to-morrow  morning  bring  about  bimetallism  absolutely,  upon  the 
monetary  practice  of  the  entire  world  on  the  basis  of  16  to  1,  and 
thus  settle  this  question  and  take  it  out  of  politics — I  say  I  believe 
that  the  majority  of  this  faction  would  be  found  not  only  not 
supporting  the  proposition  that  would  thus  result,  but  opposing 
it  with  all  their  might,  because  it  would  be  the  overthrow  of  their 
entire  stock  in  trade,  and  the  great  questions  of  capital  and  labor 
and  other  matters  vital  to  the  interests  of  the  people  that  would  con- 
front us  in  the  immediate  futiire  would  be  the  field  of  politics  into 
which  they  would  be  driven,  or  else  they  would  be  driven  into 
absolute  retirement. 

I  congratulate  this  Congress,  therefore,  that  the  best  thing  it 
has  done,  the  best  thing  the  Almighty  has  given  it  power  to  do, 
is  an  effort  to  do  something  more  than  mere  words — more  than 

1898 


mere  efforts  of  oratory  and  demagogy— to  bring  something 
absolutely  helpful  and  hoi)eful  to  pass  in  this  great  country. 
[Great  apphuise.] 

Mr.  Simpson  having  replied,  and  having  compared  his  present 
demands  on  the  silver  question  with  the  action  of  Hamilton  and 
Jefferson,  and  having  assailed  Ohio  and  charged  that  it  was  a 
bankrupt  State,  and  its  people  starving — 

Mr.  GROSVENOR  (continuing)  said: 

Mr.  Speaker:  The  declaration  of  the  gentleman  from  Kansas 
[Mr.  Simpson]  shows  to  the  people  of  the  country  the  extreme 
density  of  the  ignorance  of  men  touching  this  doctrine  of  free 
silver.  He  talks  about  the  action  of  Jefferson  and  Hamilton  in 
the  establishment  of  silver  and  gold  in  the  coinage  of  our  country. 
Why,  Mr.  Speaker,  does  not  the  gentleman  know  that  there  is  no 
comparison,  no  illustration,  nothing  germane.  Let  me  call  the 
attention  of  the  young  men  of  this  House,  the  students  of  Amer- 
ican politics — any  young  man  who  hears  my  voice  now — to  the 
fact,  important  and  controlling  fact,  that  when  Hamilton  estab- 
lished the  coinage  of  gold  and  silver  in  the  United  States,  or  when 
it  was  done  at  the  time  indicated  by  the  gentleman  from  Kansas, 
the  monetary  systems  of  the  Old  World  were  based  upon  gold  and 
silver.  They  had  bimetallism.  They  had  gold  and  silver  in  their 
coinage;  and  we,  the  infant  nation,  simply  came  forward  and 
joined  the  great  sisterhood  of  countries.  We  merely  adapted 
our  coinage  to  the  existing  systems  of  the  old  countries.  We 
simply  moved  into  the  family  and  adopted  the  customs  and  prac- 
tices of  the  family. 

But  here  is  a  proposition  that  departs  from  the  customs  of  the 
family  and  is  against  the  conditions  surrounding  the  other  na- 
tions of  the  world.  We  shall  undertake  the  free  coinage  of  silver 
wholly  in  opposition  to  the  jn'^ctices  of  the  world.  The  differ- 
ence shows  upon  what  false  theories  of  politics  this  whole  fabric 
is  raised. 

Now,  Mr.  Speaker,  one  other  word.  The  gentleman  has  seen 
fit  to  assail  Ohio,  and  charge  that  the  people  of  Ohio  are  starving 
and  that  the  State  is  bankrupt.  Why,  Mr.  Speaker,  here  is  a  density 
of  ignorance  beyond  compare.  Ohio  bankrupt! — with  her  ability 
to  borrow  money  at  a  rate  of  intei'est  lower  than  the  Democratic 
party  can  borrow  it  through  the  channels  of  the  General  Govern- 
ment. The  mighty  State  of  Ohio  bankrtipt! — to-day  supporting  the 
finest  system  of  public  institutions  in  all  the  world !  Here  and  there 
a  section,  a  few  townships  in  the  more  than  2,000  townships  of 
the  State — here  and  tiiere  perhaps  in  a  half  dozen  townships  a 
class  of  people  rendered  idle  and  helpless  by  the  exigencies  of 
these  times  is  suffering  for  food;  but  the  people  of  Ohio  are  not 
only  supporting  those  people,  taking  care  of  those  people,  but  I 
point  with  pride  and  pleasure  to  the  fact  that  we  have  sent  to  the 
State  of  Kansas  long  trains  of  cars  bearing  provisions  to  the  starv- 
ing people  of  some  of  those  sections;  and  now  recently,  with  all 
oiir  troubles  upon  us,  out  of  the  abundant  production  and  wealth 
of  the  State  of  Ohio  her  people  have  sent  car  load  upon  car  load, 
day  in  and  day  out,  one  month  after  the  other  month,  to  supply 
the  distress  of  the  people  of  the  State  from  which  comes  my  distin- 
guished friend — tlie  State  of  Nebraska.  We  are  not  only  able 
to  take  care  of  our  own  people,  but  also  the  suffering  people  of  the 
other  States. 

1898 


THE   CURRENCY. 


SPEECH 


OF 


HON.  EUGENE  J.  HAINER, 


OF  NEBRASKA, 


HOUSE    OF    REPRESENTATIVES, 


Tuesday,  February  5, 1895. 


WA.SIIINGTON. 

1895. 


SPEECH 

OF 

HON.    EUGENE    J.    HAINER. 


On  the  bill  (H.  R.  8705)  to  aiithorize  tbe  Secretary  of  the  Treasury  to  issue 
bonds  to  maintain  a  sufficient  gold  reserve,  and  to  redeem  and  retire  United 
States  notes,  and  for  other  purposes. 

Mr.  HAINER  said: 

Mr.  Speaker:  It  is  now  evident  to  every  tlioughtftil  observer 
that  no  solution  of  tlie  great  questions  of  finance  confronting  us 
will  be  reached  by  the  Fifty-third  Congress. 

It  is  perhaps  as  well.  too.  that  this  Congress  should  as  quietly 
as  possible  sink  into  oblivion  without  further  vexing  the  country 
with  any  scheme  of  its  devising. 

ISTo  plan  can  afford  assurances  of  success  emanating  from  a 
source  which  does  not  command  the  confidence  of  the  mass  of  our 
people. 

The  plain  truth  is,  this  Congress  does  not  enjoy  the  confidence 
of  any  considerable  portion  of  the  nation.  It  has  been  repudiated 
more  emphatically  than  any  Congress  ever  convened.  Its  work 
is  in  derision,  and  no  expressions  other  than  of  contempt  for  its 
capacity  have  j'et  been  heard.  Its  final  adjoiu'nment  will  be  its 
only  act  generally  approved,  and  this  act  will  be  an  enforced  one, 
for  which  it  can  take  not  the  slightest  credit. 

The  discussions  now  going  on  here  and  elsewhere  may,  how- 
ever, serve  as  a  thought  suggester,  stimulating  the  student,  the 
practical  business  man  in  every  field  of  human  endeavor,  and  the 
patriot  to  evolve  a  plan  upon  which  we  may  safely  rest.  Many 
contributions  of  value  have  been  made  to  the  store  of  information 
on  the  subject,  and  no  better  service  can  be  rendered  here  than  to 
place  on  record  for  comparison  and  considerate  judgment  the 
knowledge,  experience,  and  best  thought  of  earnest,  successful, 
fair,  brainj',  patriotic  men  whose  every  purpose  and  interest  is  in 
the  direction  of  such  an  issue  of  our  difficulties  as  will  insure  the 
greatest  good  to  the  greatest  number,  and  whose  opportunities, 
life,  and  character  give  weight  to  their  opinions  and  judgment. 
As  fairly  representative  of  this  class  in  my  State  are  the  gentle- 
men whose  papers  I  append  hereto  and  make  a  part  of  my  remarks: 

A  Plan    for  Currency  Reform. 

This  paper  is  written  in  the  belief  that  the  power  to  issue  currency  can  not 
safely  be  diffused,  but  should,  at  least  to  some  extent,  be  centralized,  if  it  is 
to  be  exercised  for  the  best  interests  of  the  people;  that  with  a  wid*;  diffusion 
of  the  currency  franchise,  currency  secured  by  bonds  will  be  bickiug  in  flex- 
ibility, and  currency  not  secured  by  bonds  will  be  lacking  in  alisolute  safety, 
and  wiU  be  more  often  used  to  subserve  private  ends  than  public  good,  that 
the  partial  centralisjation  of  the  currency  franchise  that  exists  in  Canada  can 
not  exist  here,  because  of  differences  in  our  banking  systems,  that  the  more  or 
less  complete  centralization  existing  in  Europe  through  the  agency  of  large 
2  1905 


government  banks  can  not  be  effected  here,  because  the  traditions  of  the 
people  are  opposed  to  such  banks,  but  that  a  salutary  degree  of  centraliza- 
tion can  be  best  attained  here  by  perfecting  and  perpetuating  the  greenback 
and  supplementing  it  with  a  clearing-house  currency  for  temporary  use, 
when  the  ordinary  supply  is  evidently  insufficient. 

In  considering  the  subject  of  currency  reform,  the  chief  questions  that 
seem  to  confront  us  are,  how  shall  we  make  and  keep  our  ciirrencj^  substan- 
tially uniform  in  character  and  vahie,  and  how  shall  we  render  it  elastic, 
especially  in  great  emergencies?  The  following  plan  is  suggested  as  likely  to 
promote  both  uniformity  and  elasticity: 

THE  PROPOSED  PLAN. 

1.  Provide  for  the  transfer  of  all  business  pertaining  to  Government  issues 
of  currency  from  the  bureau  of  the  Treasurer  of  the  United  States  to  a  sepa- 
rate bureau — either  to  a  new  one  to  be  created  for  the  purpose,  or  to  that  of 
the  Comptroller  of  the  Currency.  In  this  paper,  for  the  sake  of  convenience, 
the  existing  bureau  will  be  designated  as  "the  Treasurer's  bureau,"  and  the 
proposed  bureaii  "  the  currency  bureau."  Place  upon  the  books  of  the  cur- 
rency bureau  all  the  liabilities  of  the  Treasury  Department  on  account  of 
circulating  notes  issued  by  the  Government  and  transfer  to  it  the  custody  or 
control  of  all  reserves  of  metal  held  for  the  redemption  of  such  issues.  Place 
upon  its  books,  also,  the  liability  of  the  Treasury  Department  for  all  bonds 
hereafter  issued  for  the  purpose  of  paying  the  Government  issues  or  for  pro- 
viding funds  for  their  payment,  and  let  the  net  liability  of  this  bureau  appear 
as  a  separate  item  in  the  accounts  of  the  Treasury  Department. 

3.  Retain  the  one  and  two  dollar  silver  certificates  now  in  circulation  and 
issue  in  addition  thereto  one  and  two  dollar  certificates  in  lieu  of  all  notes  of 
those  denominations  now  outstanding,  covering  the  entire  issue  of  siich  cer- 
tificates as  now  by  a  deposit  of  silver  dollars  in  the  Treasury.  The  amount 
of  certificates  of  these  denominations,  after  the  proposed  change  had  been 
effected,  would  be  about  $67,000,000.  Provide  for  the  further  issue  of  one  and 
two  dollar  silver  certificates  in  exchange  for  deposits  of  silver  dollars  to  such 
an  extent  as  may,  from  time  to  time,  be  needed  to  meet  the  wants  of  the 
people  for  bills  of  these  denominations. 

3.  In  place  of  all  remaining  currency,  inchiding  old  legal-tender  notes,  Sher- 
man notes,  silver  certificates,  and  national-bank  notes,  but  exchiding  gold 
and  cui'rency  certificates,  issue  a  new  Treasury  note  in  denominations  of  $a  and 
upward.  The  amount  of  these  Treasury  notes,  after  the  substitution  had 
been  consummated,  would  be  about  $975,000,000. 

4.  Require  the  new  Treasury  notes  to  be  redeemed  in  silver  dollars  when- 
ever silver  dollars  were  demanded.  "When  holders  of  such  notes  did  not 
want  silver  dollars,  give  the  Secretary  of  the  Treasury  the  right  to  redeem 
them  at  his  option,  either  in  gold  coin  or  in  silver  bullion  at  its  current  mar- 
ket value. 

5.  Provide  for  a  reserve  to  protect  these  notes,  fixing  the  minimum  amount 
at  50  per  cent  of  all  outstanding  notes  in  excess  of  $200,000,000  until  the 
amount  outstanding  reached  $900,000,000,  and  at  60  per  cent  of  all  such  notes  in 
excess  of  that  amount.  Require  not  less  than  50  per  cent  of  this  minimum 
reserve  to  be  in  silver  bullion  or  in  silver  coin  at  its  bullion  value;  not  less 
than  25  per  cent  in  gold  coin,  and  not  less  than  3  per  cent  in  silver  dollars. 

6.  Empower  and  direct  the  Secretary  of  the  Treasury  to  maintain  this  re- 
serve by  issuing  bonds,  giving  him  ample  discretion  as  to  length  of  time  and 
rate  of  interest.  Authorize  him  to  require  such  bonds  to  be  paid  for  in  the 
medium  needed  to  restore  the  reserve  to  its  legal  condition.  Empower  him, 
also,  whenever  an  unusually  easy  money  market  indicating  a  temporary  re- 
dundancy of  currency  is  accompanied  by  an  increased  demand  for  redemp- 
tions or  increased  exports  of  the  precious  metals,  to  issue  in  exchange  for 
Treasixry  notes  short-time  bonds  bearing  a  low  rate  of  interest  and  payable 
in  Treasury  notes,  keeping  the  Treasury  notes  so  redeemed  in  the  currency 
bureau,  ready  for  use  when  needed  in  the  operations  of  that  bureau.  These 
bonds  might  be  made  payable  on  short  notice  (say  three  to  six  months)  at  the 
option  of  either  the  holder  or  of  the  Treasury  Department  without  fixing  a 
date  of  payment,  and  some  discretion  might  be  given  the  Secretary  as  to  the 
rate  of  interest.  Authorize  the  Secretary,  in  a  tight  money  market,  when 
demands  for  the  redemption  of  the  Treasury  notes  had  ceased,  or  had  been 
reduced  to  a  minimum,  to  pay  these  currency  bonds  without  the  required 
notice. 

7.  Allow  the  Treasiirer's  bureau  to  present  Treasury  notes  to  the  currency 
bureau  for  redemption  when  necessary  to  obtain  coin  for  the  use  of  the  Gov- 
ernment, and  permit  it  to  deposit  coin  in  the  currency  bureau  in  exchange 
for  Treasury  notes  whenever  it  had  the  coin  and  could  use  the  Treasury  notes 
instead. 

Within  narrow  limits  to  be  prescribed  by  law,  permit  transfers  of  funds 
from  one  biireau  to  the  other  to  an  extent  necessai'y  to  netitralize  such  dis- 

1905 


turbances  of  the  circulating  medium  as  are  causea  l)y  inequalities  between 
receipts  and  disbursements  of  revenues.  With  these  exceptions,  forbid  all 
interniinsrling  of  the  funds  of  the  two  bureaus. 

8.  Prohibit  the  further  issue  of  the  national-bank  note  and  provide  for  the 
ultimate  retirement  of  all  such  notes  now  outstanding. 

9.  Permit  the  banks  in  the  lar^'cr  cities  to  associate  themselves  in  corpora- 
tions to  be  known  as  "consolidated  national  banks,"  requiring  the  consent  of 
a  majority  of  banks  in  any  city  bcfoi-c  iicniiirtinji  the  organization  of  such  a 
bank  in  that  city.  Give  any  "  consolidated  national  bank  "  the  right  to  issue 
currency  in  emergencies  whenever  a  ci'rtain  majority  of  its  constituent 
banks  asked  for  and  the  Secretary  of  the  Treasviry  approved  of  the  issue. 
Limit  the  amount  of  such  issues  to  a  certain  percentage  of  the  capital  and 
surplus  of  all  the  constitucTit  liaiiks,  and  make  all  such  issues  the  tirst  lien  on 
all  assets  of  botli  the  consolidated  bank  and  its  constituent  banks. 

10.  Forbid  the  consolidated  bank  to  use  the  currency  issued  by  it  except  by 
wav  of  loans  upon  collateral  to  some  one  or  more  of  its  constitui-iit  banks. 

11.  Place  a  tax  on  the  circulation  i.ssaed  by  such  consolidated  lianksof  such 
an  amount  as  to  absorb  the  greater  part  of  the  profits  to  lie  derived  from  its 
issue  and  to  insure  the  retirement  of  such  currency  as  soon  as  the  money 
market  became  easier. 

1;J.  Require  the  consolidated  banks  to  maintain  in  the  currency  bureau  a 
redemption  fund  equal  to  '■>  per  cent  of  their  circulating  notes  on  a  plan  simi- 
lar to  that  now  in  force  with  regard  to  our  iiresent  national- bank  circulation. 

13.  Place  the  taxes  collected  on  such  circiilation  in  the  United  States  Treas- 
urv  to  the  credit  of  a  special  redemption  fund;  provide  that  this  fund  shall 
belong  to  the  United  States,  but  nermit  it  to  be  used  to  redeem  the  notes  of 
banks  that  fail  to  keep  their  redempti(m  funds  good,  and  provide  that  the 
Treasury  Depai-tment  shall  collect  from  the  banks  in  default  the  amount  of 
the  notes  so  redeemed. 

ASSUMPTIONS  ON  WHICH  THIS  PAPER  IS  BASED. 

Before  proceeding  to  the  consideration  of  the  advantages  of  the  plan  out- 
lined above,  and  without  attempting  to  discuss  the  question  of  bimetallism, 
it  may  for  the  purposes  of  this  paper  be  assumed  that,  considering  the  vast 
products  of  our  silver  mines,  considering  that  we  are  a  debtor  nation  likely 
to  be  called  upon  at  times  to  purchase  vast  (juantities  of  our  securities  now 
held  abroad,  and  considering  that  we  are  a  large  nation,  occupying  a  vast  ter- 
ritory and  having  legitimate  use  for  an  enormous  amount  of  currency,  it  is 
not  best  for  us  to  depend  upon  gold  alone  as  the  basis  of  our  circulation;  and, 
on  the  other  hand,  it  may  in  like  maimer  be  assumed  that  for  the  present  at 
least  the  free  coinage  of  "silver  is  not  consist  fut  with  practical  bimetallism, 
but  must  result  in  silver  monometallism  and  is  therefore  to  be  avoided. 

OUR  PRESENT  GOVERN.MENT  ISSUES. 

Let  us  take  a  brief  glance  at  our  currency  as  it  is.  The  public  has  long 
been  aware  that  our  present  monetary  system,  if  system  it  may  be  called,  is 
full  of  incongruities.  Originating  in  a  great  national  emergency,  it  has  been 
modified  from  time  to  time,  as  other  emergencies  have  arisen,  so  that  in- 
stead of  manifesting  a  harmonioiisly  developed  plan  it  is  seen  to  be  the  out- 
growth of  varying  circumstances  and  of  conflicting  motives  and  theories.  In 
conseciuence  it  comprises  features  that  are  almost  contradictory  in  their 
character.  This  lack  of  uniformity  has  in  the  past  been  made  the  subject  of 
frequent  adverse  comment,  and  is  to-day  the  just  cause  of  serious  fore- 
bodmg. 

Of  the  currency  that  is  issued  by  the  nation  one  part  represents  a  vast 
store  of  silver  coin,  another  part  a  large  amount  of  silver  bullion,  and  still 
another  portion  is  covered  in  part  by  a  reserve  of  gold— a  reserve,  however, 
with  practically  no  adecpiate  provision  for  its  maintenance.  Under  such  cir- 
cumstances, and  with  unprecedented  fluctuations  in  the  ratios  subsisting 
between  the  values  of  the  precious  metals  which  cover  the  different  cla-sses 
■  of  currency,  it  would  have  been  marvelous  if  some  doiibts  had  not  arisen  as 
to  the  character  of  the  medium  in  which  redemptions  would  finally  be  made; 
and,  however  reassuring  the  repeal  of  the  Sherman  law  may  have  been,  the 
uncertainty  resulting  from  the  lack  of  uniformity  still  remains  to  vex  and 
disturb  our  commerce. 

FLEXIBILITY. 

It  is  hardly  necessary  to  make  any  comment  at  the  present  time  as  to  the 
neces.sity  for  a  certain  degree  of  flexibility  in  our  currency.  The  panic  of 
18it:j.  with  the  urgent  need  for  currency  that  then  existed  and  the  devices  that 
were  resorted  to  for  the  purpose  of  providing  substitutes,  is  still  fresh  in  our 
minds.  There  are.  it  is  true,  those  who  imagine  that  the  volume  of  currency 
should  bear  some  arbitrary  ratio  to  the  ])opnlation:  but,  in  fact,  the  volume 
of  currency  needed  in  any  community,  in  addition  to  that  part  of  it  which  is 
used  as  a  store  of  value,  must  be  proportionate  to  the  volume  and  character 
1901 


of  those  transactions  which  require  currency  for  their  consummation  rather 
than  to  the  number  of  inhabitants  in  the  community. 

As  these  transactions  vary,  and  as  greatej-  or  less  use  is  made  of  money  as 
a  store  of  value,  the  amount  of  currency  needed  varies.  A  familiar  illustra- 
tion of  the  variation  in  tlie  amount  of  currency  needed  is  afforded  by  the  de- 
mand for  currency  for  moving  crops.  This  demand,  however,  is  generally 
local  and  can  generally  be  supplied  by  moving  currency  from  one  locality  to 
another.  But  the  increased  demand  for  currency  is  not  always  local.  In 
times  of  financial  distress  following  periods  of  inflation,  when  credits  have 
become  uncertain  and  checks  and  drafts  fail  to  dischai-ge  their  ordinary  func- 
tions in  making  exchanges,  and  when  a  large  ]iart  of  the  community  sees  fit 
to  make  an  unusually  large  use  of  money  as  a  store  of  value,  not  only  is  there 
a  smaller  amount  of  curi'ency  than  usual  available  for  the  work  of  effecting 
exchanges,  but  the  work  to  be  done  by  this  decreased  amount  is  largely  in- 
creased. 

At  such  times  there  is  a  legitimate  use  for  a  much  more  abundant  supply  of 
good  money.  And  when,  during  sixch  a  period,  any  considerable  part  of  our 
circulating  medium  is  used  in  the  settlement  of  foreign  balances,  the  need  of 
additional  currency  becomes  imperative.  When,  however,  the  crisis  is  past — 
when  values  have  declined  and  transactions  are  fewer  in  number  and  less  in 
amount — when  domestic  exchanges  are  reduced  in  volume,  when  foi-eigu  ex- 
changes are  again  in  our  favor,  when  money  is  no  longer  hoarded  and  checks 
and  drafts  resume  their  wonted  functions  in  effecting  exchanges,  then  the 
former  sujiply  of  currency  is  not  only  adequate,  but  often  temporai'ily  exces- 
sive. The  wants  of  the  community  in  such  cases  are  thei'ef  ore  met  by  a  tem- 
porary addition  to  the  currency.  How  to  provide  this  temporary  addition 
without  permanent  inflation  is  one  of  the  proVilems  of  a  flexible  circulation. 

We  must  here  note  the  sharp  distinction  that  exists  between  those  local 
stringencies  which  are  a  result  of  insufficient  capital  or  unwise  speculation, 
and  which  occur  when  the  national  supply  of  money  is  abundant,  and  those 
stringencies  which  clearly  indicate  that  the  people's  stock  of  money  is  either 
temporarily  or  permanently  insufficient.  It  is  clearly  the  duty  of  the  Gov- 
ernment to  enact  such  measures  as  are  calculated  to  result,  either  directly 
or  indirectly,  in  supplying  the  nation  with  an  abundant  stock  of  money,  but 
it  can  not  guarantee  that  every  individual  or  every  locality  shall  at  all  "times 
be  able  to  control  such  portion  of  this  supply  as  may  seem  desiraljle.  If 
every  locality  and  evei-y  bank  that  finds  its  stock  of  cash  inadequate  while 
the  nation  at  large  has  curi'ency  in  abundance  should  be  permitted  to  sup- 
ply its  wants  by  a  further  issue  of  bank  notes,  there  might  be  some  force 
to  arguments  in  favor  of  granting  a  similar  privilege  to  evei'y  individual  who 
is  in  embarrassed  circumstances,  or  who  is  attempting  more  than  his  capital 
warrants,  and  the  Poijulist  subti'easury  plan  might  not  be  unworthy  of  seri- 
ous consideration. 

DIFFICULTIES      IN      THE     WAY     OF     PROCURING     A     FLEXIBLE     CURRENCY 
THROUGH  THE  TREASURY. 

As  to  the  currency  issued  directly  by  the  nation  it  must  be  noted  that  the 
Treasury  Depai-tment  has  been  restricted  to  very  few  means  for  either  plac- 
ing money  in  circulation  or. withdrawing  it  from  circulation.  It  is  true  that 
at  times  the  Treasury  has  given  some  relief  to  the  money  market  by  the  pur- 
chase of  bonds,  by  anticipating  payments  of  interest,  or  by  placing  funds  in 
the  depositai-y  banks,  but  as  a  rule  its  ability  to  add  to  or  draw  from  the  gen- 
eral circulation  has  depended  vipon  its  revenues  and  disbursements,  means 
which  generally  are  beyond  control  and  are  rarelj'  availaljle  at  a  time  when 
the  wants  of  the  public  in  this  regard  are  the  keenest,  and  which  at  times 
tend  to  aggravate  rather  than  to  mitigate  the  disorders  of  the  money  mai'ket. 

The  system  of  short-time  bonds,  bearing  a  low  rate  of  interest  and  ex- 
changeable for  Treasury  notes,  which  is  suggested  in  this  paper,  would 
doubtless  go  far  toward  rendering  the  national  issues  more  flexible;  but 
there  is  no  absolute  certainty  that  such  bonds,  if  issued,  would,  in  times  of 
panic,  be  found  in  sufHcient  amounts  in  the  hands  of  those  who  would  ex- 
change them  for  Treasui-y  notes,  and  who  would  use  the  currency  received 
for  them  in  meeting  the  wants  of  the  people.  It  would  seem,  therefore,  that 
we  can  not  depend  entirely  upon  the  Treasury  for  a  flexilile  currency,  and 
must  look  to  some  other  agency  for  it.  The  only  agency  that  suggests  itself 
is  the  banking  system  of  the  country. 

PRESENT  NATIONAL  BANK  CURRENCY  NOT  SATISFACTORY. 

But  the  national-banii  currency  as  it  now  exists  is,  in  respect  to  flexibility, 
anything  but  satisfactory,  and,  in  fact,  it  fails  to  give  full  satisfaction  from 
any  point  of  view,  except  that  of  safety.  Designed  originally  to  furnish  a 
market  for  the  nation's  bonds,  and  at  that  time  affoi'diiig  the  banks  oppor- 
tunities for  making  a  profit  from  their  circulation,  the  national  banking  law 
resulted  in  furnishing  the  people  with  a  large  amount  of  safe  paper  money, 
and  in  instituting  and  perpetuating  to  the  present  date  a  system  of  commercial 
1905 


6 

banks  that  have  become  noted  for  their  success  and  safety.  But  it  has  long 
been  apparent  that  the  national  banking  system,  so  far  as  the  circulation  is 
concerned,  has  ceased  to  be  of  advantat,'e  either  to  the  Qovernnifnt.  the  peo- 
ple, or  tlie  banks.  That  it  is  a  source  of  profit  to  the  United  St:it«'s,  as  com- 
pared with  the  issues  of  United  States  notes,  is  a  proposition  that  it  would  be 
very  hard  to  maintain:  that  it  is  not  a  source  of  satisfactory  profit  to  a  large 
majority  of  the  banks  is  evident  from  the  fact  that  so  many  have  failed  to 
issue  tlie  maximum  amount  of  currency  allowed  by  law;  that  it  has  failed  to 
furnish  the  people  witli  an  abundance  of  currency  when  most  needed  is  evi- 
dent frf)m  the  very  moderate  increase  in  national  bank  circulation  that  oc- 
curred during  the  panic  of  lt<9:{. 

While  the  opponents  of  the  national  banking  system  have  criticised  it  for 
the  alleged  reason  that  it  giive  to  the  banks,  almost  gratuitously,  an  extremely 
valuable  franchise  out  ot  v.'liich  they  were  enabled  to  make  large  ])rofits,the 
national  banker  of  late  years  has  looked  in  vain  for  such  profits,  and  has 
begun  to  open  his  eyes  to  the  fact  tliat  the  franchise  virtually  belongs,  not  to 
the  organizers  of  a  bank,  but  to  the  holders  of  United  States  bonds  who.  in  an 
ordinary  money  market,  can  often  make  a  careful  computation  of  all  the 
profits  likely  to  accrue  from  the  issue  of  bank  notes,  and  then  collect  from 
the  would-be  national  banker  a  premium  on  the  bonds  that  very  nearly  ab- 
sorbs such  profits. 

As  a  consequence  many  national  banks  have  been  in  the  habit  of  buying 
the  miiiimura  amount  of  bonds  that  the  law  requires  them  to  hold,  issuing  a 
proporticjnately  small  amount  of  circulation  notes,  and  when  an  urgent  de- 
mand has  arisen  for  more  circulation  it  has  been  found  that  the  difficulties 
and  delays  that  stood  in  the  way  of  ac(iuiring  the  necessary  amount  of  bonds 
and  getting  the  desired  circulation  have  been  such  as  to  prevent  the  timely 
issue  of  an  adequate  amount  of  notes.  That  from  April  to  Sei)tem1)er.  1893, 
a  period  which  embraced  weeks,  even  months,  of  tlu;  most  acute  financial 
stress  and  panic,  we  were  enabled  by  means  of  the  national-bank  note  to  in- 
crease our  total  i)aper  currency  but  a  little  over  3  per  cent;  and  that  during 
that  period  the  banks  in  our  large  cities  were  obliged  to  resort  to  the 
clumsy,  inadequate,  and  somewhat  questionable,  though  under  the  circum- 
stances no  doubt  justifiable  device  of  the  issue  of  clearing-house  certificates,  is 
ample  evidence  of  the  inefficiency  of  tlie  national  banking  system  as  a  means 
of  providing  the  people  with  currency  when  needed. 

RECENT  PLANS  FOR  AMENDING   THE  NATIONAL  BANKING  LAWS. 

These  considerations  have  led  to  a  very  general  desire  for  improvement  in 
our  monetary  system,  and  of  late  many  plans  have  been  suggested  for  the 
amendment  of  the  national  banking  laws.  In  this  connection  iiiuch  confusion 
has  arisen  in  j'opular  discussions,  through  co7ifounding  difl^erent  kinds  of 
paper  money.  We  have  had  incnnvertibh^  paper  money,  like  the  greenbacks 
before  resitmption.  and  like  the  Ijills  of  solvent  lanks  during  s\-.spen.sious  of 
specie  payments.  We  now  have  convertible  legal-tender  CToyerninent  issues  ^ 
that  perform  all  the  functions  of  mr>ney  throughout  the  nation  and  that  it  is 
hoped  will  always  continue  to  l)e,  as  now,  instantaneously  convertible  intO' 
the  equivalent  of  the  money  of  other  nations. 

We  have  also  the  national-bank  notes,  so  thoroughly  secured  that  they  en- 
joy full  credit  everywhere  and  circulate  as  freely  as  the  national  i.ssues. 
Then  there  are  the  cmergen(;y  currencies  like  that  of  Germany,  intended  for 
temporary  use  when  the  ordinary  stock  of  money  seems  insufficient.  Most 
of  the  issues  ju.st  mentioned  maybe  assumed  to  be  intendeil  to  supply  the 
general  demand  for  a  circulating  medium,  or  at  least  they  perform  that 
function  so  thoroughly  that  that  may  be  assumed  to  be  the  chief  object  of 
their  existence.  Besides  this,  however,  there  is  what  may  be  termed  local 
currency — currency  is.sued  chiefly  for  the  purpose  of  supplying  local  wants, 
caused  by  lack  of  sufficient  local  capital.  The  fallacy  of  many  current  argti- 
ments  will  be  found  to  ctjii.sist  in  making  deductions  from  jiremises  that  may 
be  true  as  to  one  class  and  applying  the  conclusions  to  another  cla->-i. 

And  here  it  may  be  remarked  that  the  evils  resulting  from  the  rej) -al  of  the 
10  per  cent  tax  and  the  revival  of  a  State-bank  curreiiry  tliat.  wliile  disered- 
ited  away  from  nome,  would  supply  local  wants,  might  jjossibly  bo  less  than 
those  resulting  from  an  attempt  to  lower  the  standard  for  the  currency  of 
the  entire  nation,  in  order  to  make  it  possible  for  localities  to  supply  defi- 
ciencies in  capital  by  currency  i.s.sues. 

Without  att  -milting  to  make  a  thorough  analysis  of  all  recent  plans,  it  may 
be  noted  that  their  prominent  features  have  generally  been  the  abolition  of  the 
Govei-nment  issues  eitiier  wliolly  or  in  part,  and  increased  issues  of  national- 
bank  notes.  It  has  been  proposeil  to  protect  these  bank  issues  either  by  the 
guaranty  of  the  tiovernment,  V)y  a  safety  fund  accumulated  by  tax  on  circu- 
&,tion.  by  the  guaranty  <jf  V>ank"s  collectively,  by  the  deposit  of  greenbacks, 
or  by  the  deposit  of  a  new  United  States  bond  bearing  a  low  rate  of  intprcst. 
It  has  also  been  suggested  that  in  a'ldition  to  the  curreney  ordinarily  is.sued 
the  banks  at  large  should  be  authoi-ized  to  issue  an  emergency  currency,  sub- 
1905 


ject  to  a  sufficiently  liigh  rate  of  taxation  to  insiire  its  withdrawal  after  the 
emergency  which  had  called  it  forth  had  ceased  to  exist. 

There  are  many  objections  to  all  these  plfais.  In  the  first  place,  it  does  not 
seem  as  if  the  people  of  the  United  States  would  for  a  moment  approve  any 
plan*that  contemplated  the  guaranty  by  the  Federal  Government  of  the  lia- 
bilities of  any  private  corporation  unless,  as  is  the  case  with  the  present 
national-bank  notes,  the  Government  held  unquestioned  security.  In  the 
next  place,  a  full  guaranty  by  the  banks  collectively,  of  the  liabilities  of  the 
individual  banks,  no  matter  how  well  guarded,  would  have  a  tendency  to 
drive  strong  banks  out  of  the  system;  and  this  tendency  would  increase  in 
times  of  panic  when  larger  supplies  of  good  ouiTeucy  are  most  needed,  for 
the  reason  that  doubts  as  to  general  solvency  are  then  the  greatest.  If  the 
guaranty  were  anything  less  than  full  and  complete  there  would  always  re- 
main an  undesirable  element  of  uncei-tainty  as  to  the  solvency  of  the  indi- 
vidual banks  and  consequently  as  to  the  value  of  the  curi'ency. 

It  is  useless  to  say  that  the  experierice  of  the  last  thirty  years  shows  that 
a  certain  light  tax  on  the  total  circulation  would  iirovide  a  fund  sufficient  to 
guarantee  the  notes  of  all  failed  banks.  The  privilege  of  issuing  notes  under 
some  of  the  proposed  systems,  when  compared  with  the  like  privilege  under 
the  old  system,  would  be  so  much  more  attractive,  especially  to  the  weaker 
banks,  both  as  to  profits  and  as  to  opportunities  for  expansion  and  for  relief 
from  the  consequences  of  injudicious  banking,  that  statistics  gathered  under 
the  old  system  would  be  practically  worthless  for  purposes  of  comparison. 

Our  experience  with  our  present  banking  system  ought  to  show  the  futility 
of  depending  for  our  circulating  medium  upon  issues  secured  by  any  specific 
class  of  securities.  There  is  no  certainty  that  the  proposed  bonds  would  be 
sufficient  in  amount  for  the  purpose,  or,  even  if  sufficient  at  the  present  time, 
that  the  supply  could  be  maintained  in  sufficient  abundance  for  future  wants, 
or,  even  if  always  maintained  in  sufficient  abundance,  that  they  would  always 
be  available  when  needed.  If  bonds  were  issued  at  a  price  that  would  attract 
investoi's,  regardless  of  the  currency  franchise  attached  to  them,  holders  of 
such  bonds  would  be  enabled,  as  now,  to  charge  prospective  bankers  such  a 
premium  as  to  absorb  the  profits  on  currency  and  thus  tend  to  prevent  its 
issue.  If  tliey  drew  interest  at  a  rate  that  made  them  remunerative  only  when 
the  currency  franchise  attached  to  thein  was  taken  into  consideration,  it 
would  be  difficult  to  find  a  market  for  them  outside  of  those  who  wanted 
them  for  banking  purposes.  In  any  event  the  banks  would  always  labor 
under  the  difficulties  that  attend  the  procuring  of  the  bonds  just  at  the  time 
they  are  needed,  and  if  intended  as  a  basis  for  an  emergency  currency  there 
would  be  little  inducement  for  banks  to  issue  such  currency,  for  the  reason 
that  they  would,  as  now,  have  to  advance  the  money  to  buy  the  bonds  before 
they  could  get  the  currency',  and,  although  by  so  doing  they  added  to  the 
total  stock  of  money,  they  would  do  so  at  considerable  inconvenience  and 
with  little  or  no  direct  advantage. 

All  these  plans  contemplate  the  wide  diffusion  of  the  right  to  issue  cur- 
rency. We  must  not  overlook  the  fact  that  a  strong  tendency  against  such 
diffusion  exists  in  other  countries,  and  the  further  fact  that  there  are  good 
reasons  for  this  tendency.  If  the  object  of  diffusing  the  right  to  issue  cur- 
rency is,  as  alleged,  to  enable  banks  to  supply  the  ]3eople  with  necessary 
currency  according  to  the  legitimate  demands  of  trade,  then  it  may  be  noted 
that  many  of  the  plans  that  have  recently  been  suggested  are  more  likely 
to  accomplish  other  purposes  than  this.  The  issue  ol  currency  under  rea- 
sonable guarantees  for  its  safety,  but  without  the  pledge  of  some  specific  se- 
curity, accomplishes  two  objects.  In  the  fir.st  ijlace,  it  mobilizes,  extends, 
and  strengthens  the  use  of  the  issuing  bank's  credit.  In  the  next  place,  it 
adds  to  the  people's  stock  of  money.  Now,  it  is  reasonable  to  suppose, 
where  the  currency  franchise  is  widely  diffused,  that  each  bank  will  use  the 
right  to  issue  currency  as  prompted  by  its  opportunities  or  necessities,  and 
in  order  to  defend  such  diftusion  it  is  necessary  to  assume  that  these  neces- 
sities and  oppdl'tunities  will  be  coincident  with  the  actual  need  for  an  in- 
crease in  the  circulating  medium.  It  is  contended  that  such  an  assumption 
is  not  justifiable,  but  that  the  right  would  often  be  used  to  foster  unhealthy 
local  speculations  or  to  ward  off  the  logical  consequences  of  injudicious 
banking,  even  when  the  nation's  supply  of  currency  was  redundant. 

Centralization  ot  the  currency  franchise,  on  the  contrary,  when  honest  and 
capable  men  control  it,  not  only  does  not  prevent  a  prompt  i-esponso  to  the 
nation's  wants,  but  increases  the  probability  that  is.sues  will  Ih'.  made  solely 
in  response  to  actual  need  of  increa.sed  circulation.  The  greater  publicity 
attending  its  use  when  centralized,  the  superior  skill  of  those  likely  to  be 
charged  with  its  exercise,  and  the  increased  opportunities  they  will  have  for 
a  commanding  view  of  the  whole  field  of  national  commerce,  all  tend  strongly 
to  prevent  its  use  except  in  strict  accordance  with  the  public  good. 

Another  objection  to  most  of  the  recent  plans  lies  in  the  fact  that  no  pro- 
visions are  made  for  the  separation  of  the  currency  reserves  from  the  de- 
1905 


8 

posit  reserves,  so  that  when  large  demands  for  redemption  spring  up,  deposit 
reserves  are  likely  to  be  depleted,  resulting  in  serious  embarrassment  to 
commeroial  interests. 

But  the  chief  (;l)jection  to  all  of  these  plans  lies  in  the  fact  that  they  con- 
template the  abolition  of  the  Government  is.sues. 

REASONS  FOR   PEKPETITATINO  THE  TREASURY  NOTE. 

The  greenback  is  to-day  being  tested  under  circumstances  more  tryingthan 
any  that  have  attended  it  since  the  resumption  of  specie  payments.  The.se 
circumstances,  however,  are  largdv  the  rcsultof  injudicious  legislation.  The 
endless  chain  of  redemptions  wliicli  now  draws  the  gold  from  the  Treasury 
is  not  a  necessary  conconiitaut  of  Govi-riiment  issues,  but  is  only  an  unfor- 
tunate phenomenon  attending  the  present  conjuncture  of  a  temporarily  re- 
dundant currency,  a  heterogeneous  and  inade(inate  reserve,  and  a  deficient 
revenue.  In  spite,  however,  of  the  present  unsatisfactory  condition  of  the 
Government  issues,  and  in  spite  of  the  difficulties  that  attend  any  attempt 
to  place  them  on  a  more  rational  basis,  it  must  not  be  forgotten  that  their 
good  (pialities  and  the  esteem  in  which  they  are  held  by  the  people  are  such 
as  to  make  any  attempt  to  abolish  them  or  to  put  any  other  cui'rency  in  their 
place  not  only  unwise  but,  it  is  to  be  hoi)ed,  impossible  of  attainment. 

Based  upou  the  faith  of  a  nation  of  unbounded  resources  and  accepted  as 
the  safest  possible  currency  for  all  domestic  transactions,  if  they  were  uni- 
fied and  if  ample  provisions  were  made  for  the  redemption  in  a  stable  me- 
dium of  that  .small  part  of  the  currency  which  is  at  times  needed  for  the  set- 
tlement of  foreign  balances,  and  if,  besides,  some  reasonable  degree  of  flexi- 
bility could  be  given  them,  they  would  form  an  ideal  currency,  with  the 
exception  that  the  transactions  of  the  Treasury  do  not  come  in  such  close 
touch  with  the  people  as  to  make  its  is.sues  always  responsive  to  their  need. 

In  great  emergencies  almost  every  nation  has  been  compelled  to  resort  to 
large  issues  of  paper  money — issue's  either  made  directly  by  the  nation  it- 
self or  indirectly  through  some  large  banking  institution  bearing  intimate 
relations  to  the  Government.  As  the  policy  of  this  country  is  averse  to  a 
large  Government  bank  it  will  readily  be  seen  of  what  vast  advantage  it  may 
be  to  the  nation  in  some  great  emergency  if  it  has  a  sound  and  well-defined 
policy  in  regard  to  its  issues  of  paper  currency.  It  is  worth  while,  then,  to 
make  every  effort  to  perfect  and  perpetuate  these  issues,  and  even  if  they 
can  not  be  made  to  meet  every  want,  we  should  hesitate  to  indorse  any  plan, 
no  matter  what  its  apparent  merits,  that  contemplates  their  abolition. 

MONETARY  SYSTEMS  OF  OTHER  COUNTRIES. 

The  problem  of  furnishing  an  emergency  currency  seems  to  be  subject  to 
special  difficulties  in  this  country,  for  the  reason  that  conditions  vary  to  such 
an  extent  that  the  experience  of  foreign  nations  does  not  always  furnish  us 
a  precedent  that  we  can  safely  follow.  In  Canada  a  few  large  banks,  with 
many  branches,  transact  the  business  of  the  country,  and  the  responsibility 
for  the  jjroper  use  of  the  powers  intrusted  to  them  rests  in  comparatively 
tew  hands.  Becau.se,  under  these  conditions,  a  certain  system  is  successful, 
it  does  not  follow  that  it  would  meet  with  like  success  in  this  country,  with 
its  thousands  of  small  banks,  among  which  the  personal  responsibility  for 
the  proper  use  of  the  power  to  issue  currency  would  be  divided  to  such  an 
extent  that  it  would  practically  disappear.  And  the  same  distinction  may 
be  made  with  still  greater  force  when  we  consider  the  possible  adai)tal)ility 
of  systems  in  which  there  is  still  greater  centralization  of  the  currency  fran- 
chise, as  in  England,  Germany,  and  France.  Arguments  based  on  tlie  systems 
employed  there  are  evidently  inapplicable  here. 

But  not  only  are  we  unable  to  solve  the  j)roblem  by  incorporating  into  our 
system  of  small  independent  local  banks  those  features  which  are  attended 
with  success  when  the  currency  franchise  is  monopolized  by  a  large  Govern- 
ment bank,  or  is  distributed  among  a  comparativi'ly  small  number  of  large 
banks  with  numerous  branches,  but  we  ari>  pi-aiti' ally  unable  to  reorganize 
our  banking  system  so  as  to  make  either  the  largi-  Government  bank  or  sy.s- 
tems  of  lai'ge  Iji-anch  banks  a  part  of  it.  It  would  take  vigorous  and  persistent 
effort  to  domesticate  the  branch  banking  system  in  the  United  States,  and  a 
large  Government  bank  is  equally  out  of  the  question. 

Occupying  commanding  positions  in  the  world  of  commerce,  managed  by 
men  of  large  experience  and  acknowledged  integrity  and  ability,  standing  in 
direct  contact  with  the  business  interests  of  the  people,  and  posses.sing 
almost  a  monopoly  of  the  currency  franchise,  the  great  Government  lianks 
of  Euroiie  are  enabled  to  discharge  the  responsible  duty  of  regulating  the 
currency  supply  with  far  greater  precision  than  is  possible  where  the  cur- 
rency franchise  is  widely  diffused.  And  they  do  more  than  this.  As  custo- 
dians of  the  Government  deposits  they  prevent  the  derangements  of  the 
money  market  which  result  from  the  lockmg  up  of  currency  when  revenues 
are  in  excess  of  disbursements,  and  they  are  able  to  render  temporary  aid 
to  the  Government  when  revenues  are  deficient.  But  the  traditions  of  this 
1905 


9 

nation  are  in  favor  oi  an  moependent  Treasury,  and  decidedly  opposed  to  a 
colossal  bank,  posscssini;-  a  monopoly  of  the  currency  franchise  and  receiv- 
ing and  disbursins:  th(>  (Tovernment  revenues.  And  this  sentiment  is  doubt- 
less salutary.  As  a  I'esult  of  existing  laws  and  customs  there  is  already 
great  centralization  of  power  in  the  hands  of  the  few,  and  the  people  may 
well  hesitate  to  delegate  to  gigantic  corporations  those  powers  which  can 
be  safely  exercised  by  the  nation. 

THE  PROPOSED  PLAN  FOR  EMERGENCY  CURRENCY  AND  ITS  ADVANTAGES. 

If,  then,  we  conclude  that  the  responsibility  of  inflating  or  contracting  the 
currency  can  not  safely  be  divided  among  thousands  of  small  banks;  if  the 
sentiment  of  the  people  forbids  the  creation  of  another  United  States  Bank; 
if  the  Treasury  can  not  always  supply  our  demands  when  they  become  urgent; 
if,  as  is  the  fact,  our  distance  from  and  our  relations  to  the  nations  of  Eui-ope 
make  it  at  times  both  difficult  and  costly  to  have  our  wantj^  supplied  Ijy 
them,  to  what  source  can  we  look  when  the  demand  for  additional  currency 
becomes  imperative?  We  find  our  question  practically  answered  by  the 
action  of  the  New  York  clearing  house  in  issuing  its  certificates. 

The  legality  of  the  clearing-hoiise  certificate,  it  is  true,  has  been  called  in 
question,  but  if  it  is  a  good  thing  let  it  be  legalized.  It  was  faulty  in  that  it 
formed  a  currency  that  could  not  be  put  into  general  circulation  and  that 
was  inferior  in  other  respects  to  that  in  general  use,  but  had  the  law  per- 
mitted it  a  better  currency  might  have  lieen  issued;  one  that  would  have 
been  far  more  effective  in  accomjili.shing  the  task  that  the  clearing-house  cer- 
tificate was  intended  to  perform.  But  with  all  its  faults  and  inconveniences 
it  served  a  good  purpose,  and  the  banks  of  New  York  are  entitled  to  the 
thanks  of  the  nation  for  their  courage  and  skill  in  employing  it. 

The  plan  suggested  above  in  regard  to  an  emergency  currency,  it  will  be 
seen,  is  practically  the  clearing-house  certificate  in  the  form  of  bank  notes, 
with  provisions  for  turning  into  the  Federal  Government,  in  the  form  of  taxes, 
the  profits  to  be  derived  from  its  use— its  retirement,  when  not  needed,  being 
provided  for  by  means  of  taxation.* 

It  is  believed  that  such  currency  would  be  safe  beyond  que.stion.  It  would, 
indeed,  be  a  grave  and  unusual  financial  disaster  that  caused  all  the  banks.in 
any  locality  to  become  insolvent,  and  it  is  not  to  be  supposed  that  a  majority 
of  the  banks  of  any  one  city  would  be  willing  to  ieopardize  their  own  inter- 
ests by  lending  the  currency  to  competing  banks  on  anything  but  good  secur- 
ity; besides,  it  is  hardly  to  be  imagined,  in  case  of  general  insolvency,  that 
the  total  assets  could  fail  to  pay  the  note  holders  if  they  were  preferred  cred- 
itors, especially  if  the  maximTim  amount  of  currency  was  limited  to  a  fixed 
percentage  of  the  total  capital  and  surplus. 

It  is  not  thought  that  any  system  of  currency  or  banking  can  save  the  com- 
munity from  the  penalty  of  excessive  speculation;  but  it  is  believed  that 
timely  issues  of  currency  will  mitigate  the  hardships  that  liquidation  neces- 
sarily brings  with  it;  and  it  is  thought  that,  if  such  a  system  as  is  outlined  in 
this  paper  had  been  in  existence  prior  to  isys  many  of  the  most  distressing 
features  of  the  panic  of  that  year  would  have  been  avoided.  If  the  consoli- 
dated banks  of  New  York,  of  (Jhicago,  of  St.  Louis,  and  of  other  large  cities 
had  h)een  empowered  to  issue  currency,  based  on  the  value  of  their  combined 
assets,  there  is  little  doubt  but  that  such  currency  would  have  been  issued  in 
abundance  and  would  have  passed  into  general  circulation  and  that  the  action 
of  the  banks  issuing  it  would  have  met  with  the  grateful  approval  of  the 
nation;  and  the  mere  fact  that  the  banks  of  the  larger  cities  were  empowered 
to  issue  sitch  currency  would  have  rendered  it  possible  for  them,  without  any 
sacrifice  of  prudence,  to  have  adopted  a  much  less  rigorous  policy  than  they 
were  forced  to  adopt.  At  the  same  time  necessary  liquidation  would  have 
been  no  less  complete,  since  the  tax  on  the  currency  would  have  compelled 
its  retirement  and  thus  would  have  brought  about  liquidation.  The  currency 
would  have  been  used,  not  to  promote  speculation  or  to  sustain  unsound  in- 
terBsts,  but  to  ameliorate  the  harsher  features  of  the  panic  by  making  liquida- 
tion more  gradual,  though  none  the  less  certain  and  effective. 

SILVER. 

It  is  not  intended  to  discuss  the  question  of  bimetallism,  but  the  silver 
question  can  not  be  overlooked  in  this  connection.    Whether  the  present  low 


*  Mr.  D.  G.  Ambler,  president  of  the  National  Bank  of  the  State  of  Flor- 
ida, Jacksonville,  Fla. ,  in  a  paper  published  in  t  he  proceedings  of  the  nineteenth 
annual  convention  of  the  American  Bankers'  Assoriatioii. .outlined  a  plan  for 
the  use  of  clearing  house  certificates  as  a  <-iii-ulating  medium  similar  to  that 
advocated  in  this  paper.  Not  long  ago  Mr.  Henry  \V.  Yates,  president  of  the 
Nebraska  National  Bank  of  Omaha,  Nebr..  drafted  a  bill  to  enable  clearing 
houses  to  become  the  agencies  through  which  emergency  issues  of  Treasury 
notes  could  be  placed  in  circulation.  This  bill  was  introduced  in  the  United 
States  Senate  by  Senator  Manderson. 
1905 


10 

price  of  silver  is  due  to  the  deliberate  action  of  certain  countries,  or  to  nat- 
iiral  I'auses,  or  in  part  to  both,  and  to  what  extent  the  depression  in  the  price 
of  silver  could  bo  relieved  by  free  coiniiLce  in  the  United  States,  are  all  (lues- 
tions  of  inij)ortance,  but,  as  hasalrt'iidy  lu-cu  said,  it  is  assumed  for  the  pur- 
poses of  this  paper  that  tree  coiiiui^'c  of  silver  in  the  United  States  at  the 
present  iinie  must  result  in  silver  luoiiometallisiii.  There  is  but  little  pros- 
pect that  there  will  be  an  opportunity  for  testing  the  theory  of  the  more 
conservativ(>  bimetallists,  who  hold  that  a  given  ratio  can  be  maintained  by 
internatioiuil  agreement. 

The  history  of  hundreds  of  years  has  shown  divergencies  from  the  various 
ratios  U.xed  by  law— sometimes  in  favor  of  one  metal  and  sometimes  in  favor 
of  the  other,  and  the  doubt  may  well  arise  whether  such  divergencies  can  be 
avoided;  but  the  most  important  fact  and  one  that  we  dare  not  ignore  is, 
that  to-day  we  are  contiMiitcd  l)y  an  enormous  discrepancy  between  the  com- 
mercial ratft)  and  that  whit'h  appears  on  our  statute  books— a  variance  so 
great  as  to  make  prudent  men  hesitate  to  attempt  to  close  the  gap  by  the 
mere  flat  of  law.  But  because  the  cr)untry  is  not  prepared  to  attempt  the 
exiieriment  of  free  coinage,  it  doe.j  not  follow  that  we  ought  to  fly  at  once  to 
a  monetary  system  in  which  bank  notes  and  gold  are  the  only  currency  and 
thereby  force  ourselves  either  to  trade  with  a  narrower  supply  of  the  pre- 
cious liietals  as  the  basis  of  our  dealings  or  to  sacrifice  our  securities  and 
commodities  in  order  to  obtain  a  larger  supply  of  gold. 

To  do  so,  in  the  opinion  of  the  writer,  would  be  to  increase  the  probability 
of  widespread  bankruptcies  and  panic-;,  and  to  cause  a  further  decline  in 
general  prices,  deprecating  still  further  the  Treasury's  silver  and  doing  great 
injustice  to  our  silver  interests.  Certainly,  if  use  can  beiuadf  ot  silver  m  the 
Treasury  as  the  basis  of  our  circulating  medium  without  threatening  its 
stability,  we  ought  to  so  use  it,  rather  than  by  its  issue  incur  at  once  the  loss 
resulting  from  its  depreciation  and  the  risks  attendant  upon  contraction,  or 
U])on  trading  on  too  narrow  a  mai'gin  ol'  the  precious  metals.  But  besides 
utilizing  silver  largely  for  the  Treasury  note  reserve,  the  plan  suggested  in 
this  paper  contemplates  the  free  use  of  the  silver  dollar  or  its  rejjresenta- 
tives— the  one  and  two  dollar  silver  certificates  for  all  the  smaller  transac- 
tions of  every  day  life,  giving  them  a  monopoly  of  the  paper  curreiu-y  of 
these  denominations.  The  five-dollar  note,  for  the  purpose  of  outlining  this 
plan,  is  classed  with  the  larger  notes  that  would  form  in  amount  by  far  the 
greater  part  of  our  paper  currency.  If  the  five-dollar  notes  were  placed  in 
the  same  category  with  the  ones  and  twos  a  larger  use  for  silver  would  be 
provided.    Much  might  be  said  in  favor  of  such  classification. 

PROPOSED  GOVERNMENT  ISSUES  AND   RESERVE. 

The  new  Treasury  notes,  as  has  been  remarked,  would  form  the  grreat  body 
of  our  ordinary  paper  currency.  They  would  be  supplemented  on  the  one 
hand  by  the  small  silver  certificates  and  on  the  other  by  an  emergency  cur- 
rency to  be  issued  by  the  .joint  action  of  the  banks  in  the  larger  cities  as  occa- 
sion required.  The  reserve  contemplated  is  already  in  the  Treasury,  with 
the  exception  of  a  moderate  amount  of  gold.  It  is  contended  that  the  largo 
silver  reserves  now  in  the  Treasury  may,  by  means  of  the  plan  indicated,  be 
utilized  so  as  to  assist,  to  a  very  large  e.xtent,  in  supporting  and  maintaining 
a  stable  and  uniform  currency.  The  optic  m  that  the  Treasury  would  possess 
of  paying  in  silver  at  its  market  value,  it  is  thought,  would  be  of  great  value 
in  the  occasional  emergencies  when  it  becomes  necessary  to  consider  the  de- 
sirability of  its  use,  and  its  mere  existence  might,  on  occasion,  prevent 
attempts  to  make  raids  on  the  Treasury's  gold;  and  when  the  Treasury  was 
actually  compelled  to  avail  itself  of  this  oijtion,  no  violence  would  be  done  to 
the  stability  (jf  the  value  of  the  currency  or  of  the  vast  volume  of  securities 
payable  in  currency. 

CURRENCY   BONDS. 

While  Government  issues  can  never  have  that  degree  of  flexibility  which 
can  be  obtained  in  a  great  Government  bank,  without  making  a  revolution  in 
the  functions  of  the  Treasurv  that  would  doul)tle.ss  be  productive  of  more 
harm  than  good,  yet  a  certain  degree  of  tle.\il)ility  maybe  attained  by  redeem- 
ing these  issues  in  bonds  and  in  turn  retleeming  these  bcmds  m  currency.  It 
is  true  that  this  idea,  which  is  not  a  recent  one,  has  been  a  favorite  with  the 
fiat-money  men.  It  is  to  be  noted,  however,  that  there  is  a  vast  difference 
between  those  plans  of  the  advocatesof  flat  money  which  would  pivjvide  bonds 
as  the  sole  means  for  redemption  and  a  plan  wlii<h  provides  for  redemption 
in  specie  and  offers  an  issue  f)f  bonds  as  an  alternative.  Again,  it  must  not 
be  forgotten  that  there  is  a  still  greater  dilfereTiee  between  a  plan  that  would 
pretend  to  pay  a  bond  in  papi'r  issues  that  in  turn  eould  only  be  redeemed  in 
similar  bonds,  and  <me  thatpays  off  bonds  in  pap<Tis.sues  that  are  themselves 
redeemable  in  the  precious  metals  and  that  would  pay  the  bonds  in  paper 
issues  only  because  commerce  demanded  the  paper  currency  for  immediate 
use. 

1905 


11 

Admitting  the  riglit  of  the  Governraent  to  avail  itself  of  the  benefits  of  the 
circulation  of  its  noninterest-bearing  Treasury  notes  among  its  citizens  as 
money,  it  can  not  be  denied  that  when  the  people  do  not  want  to  use  these 
notes  or  any  given  quantity  of  them  as  money  the  Government  should  either 
pay  them  in  coin  or  give  its  interest-bearing  obligation  instead.  And 
when,  in  turn,  its  citizens  find  that  they  can  once  more  make  profitable  use 
of  a  larger  amount  of  these  noninterest-bearing  notes  as  money  the  surrender 
of  the  bonds  in  exchange  for  Treasury  notes  would  be  most  natural  and,  more- 
over, profitable  to  both  parties. 

A  SEPARATE  BUREAU  FOR  THE  NATIONAL,  ISSUES. 

The  advantages  and  disadvantages  of  a  ijaper  currency  issued  by  the  Gov- 
ernment or  by  the  banks,  with  suitable  provisions  for  its  safety,  and  the  lim- 
itations that  attend  its  safe  and  profitable  use  are  understood  with  a  reason- 
able degree  of  certainty  and  unanimity. 

A  limited  amount  of  Government  legal-tender  notes,  if  receivable  for  all 
demands  of  the  Government,  ''ould  be  floated  successfully  at  par,  even  if  no 
provisions  were  made  for  their  redemption  in  coin.  A  much  larger  amount 
can  be  floated  at  par  without  demands  for  redemption  becoming  so  freqiient 
as  to  be  embarrassing,  provided  suitable  provisions  are  made  for  its  redemp- 
tion in  coin,  and  provided  the  amount  issued  is  so  limited  that  it  does  not,  at 
any  time,  become  excessive;  but  when  such  issues  do  become  excessive,  or 
even  when  they  are  large  without  being  clearly  excessive  and  the  provisions 
for  redemption  are  inadequate,  then  demands  for  redemptions  are  likely  to 
be  so  great  as  to  prove  embarrassing,  and  when,  in  addition  to  excesssive  is- 
sues and  inadequate  reserves,  other  causes,  like  the  demand  for  coin  for  ex- 
port, supervene,  then  embarrassment  may  turn  to  disaster. 

It  is  necessary,  therefore,  when  a  large  amount  of  Government  issues  is  in 
circulation,  to  know  not  only  that  they  are  covered  by  an  apparently  ade- 
quate reserve,  but  that  this  reserve  will  be  maintained,  and  it  is  therefore 
desirable  that  this  reserve  shall  be  definitely  set  apart  for  their  protection, 
and  it  is  also  desirable  that  some  provision  should  be  made  for  their  tempo- 
rary retirement  when  temporarily  excessive.  It  is  equally  desirable  that 
such  retirement  shall  not  result  in  pei-manent  contraction.  That  the  people 
may  know  exactly  the  condition  of  these  issues  and  their  reserves,  and  that 
their  permanence  and  the  permanence  of  their  reserves  may  be  insured,  it 
becomes  desirable  to  separate  all  tran.sactions  connected  with  such  issues 
from  all  other  transactions  of  the  Government,  to  the  end  that  excessive 
issues  presented  for  redemption  may  not  be  paid  out  again  for  ordinary  dis- 
bursements, and  that  funds  set  aside  to  protect  them  may  not  be  used  in  like 
manner.  It  is  also  desirable  that  currency  temporarily  retired  shall  be  i-eady 
for  reissue  when  needed.  It  is  with  these  thoughts  in  view  that  a  separate 
bureaii  for  Government  issues  is  recommended. 

The  same  individuals  may  own  a  bank  and  a  factory,  but  ordinary  business 
prudence  suggests  that  each  be  incorporated  separately,  to  the  end  that  each 
may  be  measurably  independent  of  the  other;  that  the  bank,  tor  instance, 
may  maintain  its  cash  reserves,  even  if  the  factory  is  hard  pressed  for  funds. 
By  a  similar  separation  the  credit  of  the  Treasury  issues  might  be  main- 
tained, although  a  deficit  in  the  revenues  made  new  loans  necessary  to  meet 
current  expenditures  or  even  threatened  delay  in  making  ordinary  disburse- 
ments. 

It  has  been  noted  that  the  independent  treasury  is  at  times  a  menace  to  the 
peace  of  the  money  market  by  locking  up  currency  when  revenues  are  largely 
in  excess  of  disbursements.  If  the  independent  treasury  is  to  be  maintained 
some  provision  should  be  made  to  prevent  such  occurrences.  It  is  thought 
that  transfers  within  narrow  limits  to  be  prescribed  by  law,  if  made  with  dis- 
cretion, might  remedy  this  evil  without  jeopardizing  the  integi'ity  of  the  re- 
serves. Surplus  revenues  could  be  transferred  to  the  currency  bureau,  to 
be  used  there  in  redeeming  currency  bonds,  thus  preserving  the  equilibrium 
of  the  money  mai'ket.  And  whenever  it  became  necessary  to  use  the  I'eve- 
nues  so  transferred  currency  bonds  could  be  reissued  and  the  proceeds  re- 
transferred  to  the  Treasurer's  bureau  without  disturbing  the  money  market, 
as  the  Treasury's  disbursements  would  go  back  into  circulation  to  offset  the 
withdrawals  of  currency  caused  by  the  sale  of  the  bonds.  Other  transfers 
between  the  two  bureaus  might  possibly  be  desirable,  but  all  such  transfers 
would  have  to  be  closely  limited  by  law  in  order  to  insure  the  integrity  of  the 
reserve. 

OBJECTIONS. 

It  may  be  urged  in  opposition  to  the  proposed  plan  that  it  neither  provides 
tor  local  expansion  in  response  to  ordinary  fluctuations  in  local  wants,  nor 
does  it  make  provision  for  an  increase  in  currency  to  keep  pa<(>  with  the 
increased  demand  that  may  be  reasonably  anticii)ated  as  the  passing  years 
add  to  our  poinilation,  to  our  wealth,  and  to  the  v^olume  of  our  trade.  As 
to  the  first  of  these  objections  attention  may  once  more  be  called  totheprob- 
1905 


12 

able  iinwisdom  of  sulKlividiiijjr  tho  power  to  inflate  or  contract  the  currency 
to  such  an  extent  as  to  place  it  where  tho  thouf^ht  of  general  responsibility 
to  the  pnhlic  for  its  use  vanishes,  and  tho  mere  (lucstion  of  profit  and  loss  is 
likflv  to  ln'come  i)ai-ani()unt  in  drcidin>i  the  times  uiul  aiiioiuits  (if  such  issues. 
Besides  tliis  consideration,  it  must  1k'  remeniliered  that  inrreney  can  be 
moved  cheaply  and  readily  fr.im  jilac(^  tojjlace  witliinthis  country,  and  with 
an  adequate  currency  lei;itimate  local  wants  can  generally  be  sui)plied  from 
the  nearest  money  centers  at  a  very  small  ex])ense. 

As  to  tlie  second  ob.ii'ction.  it  may  be  said  that  as  the  demand  increases  we 
may  reasonably  expect  a  i)roportionate  in<'rease  in  our  stock  of  lcoM  and  silver 
coin,  and  if  such  additions  were  not  sufticient  to  sup])ly  th<'  demand  tliat  fact 
would  jirobably  be  indicated  by  a  resort  to  the  issue  of  tiniergoncy  currency. 
If  for  a  series  of  vears  no  use  was  made  of  such  currency,  it  would  b"  rea- 
sonable to  infer  tliat  our  circuhiting  medium  was  ample  lor  our  wants.  If, 
however,  we  were  olilitred  to  resort  to  its  issue  on  frecjuent  occasions,  it  would 
not  be  difficult  to  asciTtain  the  causes  tliat  led  to  its  us(»,  and  if  it  were  found 
that  our  <-ircidating  medium  was  actually  insuffi<'ieiit  in  volume,  it  would  be 
neither  dillicult  r.or  unwise  to  meet  the  want  by  a  furtlier  issue  of  Trea.sury 
notes,  ]iri)\ided  tliey  were  issued  in  pursuance  of  a  safe,  well-planned,  and 
thiiroULchl.v  undi>rstocid  i^olicy. 

Objections  will  be  made  to  the  retention  of  the  greenback  issues  on  account 
of  the  grave  com])lications  in  which  they  have  been  involved  of  late,  but  it 
must  be  remembered  that  since  resnniijtion  no  serious  attempts  have  been 
made  to  place  them  on  a  moi"e  rati(jual  Ijasis,  ))ut  that  all  legislation  in  regard 
to  them  has  been  of  a  character  to  bring  about  the  very  difficulties  wnich 
now  attend  them,  and  that  the  resulting  defects  are  now  unjustly  charged  to 
them  as  inh(»rent. 

Of  course,  doctrinaires  of  the  "laissez  f aire"  and  the  State  rights  schools 
will  raise  the  question  of  the  proper  functions  of  the  C-rovernment  and  will 
claim  that  the  issue  of  currency  is  not  a  proi)er  function  of  the  Federal  Gov- 
ernment, nor  indeed  of  any  (Government.  The  question  of  constitutionality 
has  fortunately  been  decided,  bxit  as  to  rither  objections  of  this  character  it 
may  be  said  that  a  common-sense  view  of  the  question  would  be  that  we  can 
safely  let  the  Governjneiit  do  whatever  it  can  do  better  than  we.  as  individ- 
uals, can  do.  and  that  we'must  jirefer  to  have  it  relegate  to  individuals  or  as- 
sociations of  individuals  that  which  they  can  do  b{>tter  than  the  (rovernment. 
This  will  leave  tho  greenback  question  to  be  decided  on  its  merits.  As  far  as 
Government  issues  can  be  made  superior  to  bank  issuesletushave  the  green- 
back, and  beyond  that  point  let  us  have  a  good  liank  currem-y.  It  is  tlio  ob- 
ject of  this  paper  to  try  to  show  that  the  greenback,  as  far  as  thi>  gi-eat  bulk 
of  our  paper  money  is  concerned,  may  be  freeil  from  most  of  its  defects,  and 
may  be  made  more  serviceable  to  the  people  than  any  bank  currency  that  has 
yet  been  suggested. 

•  CONCLUSION. 

The  plan  outlined  above  may  be  and  doiibtless  is  defective  in  some  of  its 
details,  and  it  is  possible  that  further  and  fullei-  consideration  may  bring  to 
light  serious  obstacles  to  its  adoption.  Everything  connected  with  the  ques- 
tion of  a  circulating  medium  seems  to  be  fraught  with  ditficalty,  and  the  dif- 
ficulties at  tending  tlie  solution  of  the  question  under  tlie  anomalous  conditions 
now  existingin  this  country  are  greater  than  ordinary.  But  however  defec- 
tive the  details  may  bo,  it  is  the  writer's  firm  conviction  that  issues  of  Gov- 
ernment paper  moiioy  must  and  by  rights  ought  to  <'cintinue,  that  itis essen- 
tial to  the  welfare  of  the  people  of  the  United  States  that  these  issues  should 
be  unified,  and  that  some  permanent,  harmonious,  and  wolhdevelopod  policy 
should  be  adojjted  for  their  constant  j)rotection  by  uioans  of  an  adequate  re- 
serve, and  for  the  redemjitioii.  in  a  stable  medium,  of  such  parts  of  these 
issues  as  may  be  needed  for  the  settlement  of  foreign  balances,  and  that  such 
issues  should  be  supplemented  by  an  emergency  currency  to  be  issued  under 
Government  supervision  by  the  joint  action  of  the  banks  in  the  larger  money 
centers. 

C.  F.  BENTLEY,  Grand  Island,  Nebr. 

Our  Papor  Ciirroucy. 

Since  the  presentation  of  the  so-<-alled  "  Baltimore  plan  "  for  a  national  cur- 
rency, and  the  countenance  it  received  from  the  President  and  Secretary 
Carlisle,  the  country  has  been  surfeiti'd  with  currency  discussion  and  Con- 

fre.ss  overwhelmed  with  currency  plans,  every  one  of  which,  it  is  believed 
y  its  projector,  will  relieve  in  its'oiieration  the  existing  financial  difficulty 
and  prove  more  beneficial  for  the  interests  of  the  general  public  than  the 
system  we  now  possess.  Notwithstanding  the  fa(;t  that  the  present  .system 
has  been  in  operation  for  more  than  a  quarter  of  a  century,  and  covers 
decades  which  it  is  conceded  are  femai'kable  for  extraordinary  national 
growth  and  prosperity,  the  writers  and  financiers  whose  plans  and  jjapers 
1903 


13 

have  secured  the  most  prominence  join  in  the  demand  for  the  retirement  of 
the  Govei-nment  legal-tender  notes  as  a  condition  precedent  for  successful 
financial  reform. 

It  is  claimed  that  the  Government  must  go  ,iut  of  the  banking  business, 
accepting  as  granted  that  the  supplying  of  a  nation's  currency  is  a  preroga- 
tive of  ban!:ing  and  not — as  it  is — one  of  the  highest  functions  of  government. 
It  only  becomes  a  banking  privilege  when  it  is  conferred  by  Q-overnment  and 
is  only  then  exei-cisod  by  banks  in  a  representative  capacity. 

It  is  also  claimed  that  our  present  i>aper  money  lacks  the  one  essential  ele- 
ment of  elasticity,  which  is  undoubtedly  true,  but  the  elasticity  which  is 
needed  and  is  lacking  is  very  different  from  that  suggested  and  provided  in 
most  of  these  currency  plans.  Two  clearly  distinct  and  opposite  modes  of 
treatment  are  suggested  in  the  formation  of  a  new  currency  to  remove  the 
defects  existing  in  the  present  system. 

THE  EXPANSION  SCHOOL. 

One  class,  which  may  be  called  the  expansion  school,  favors  the  adoption 
of  a  scheme  in  which  the  notes  shall  be  issued  by  banks  upon  the  security  of 
their  own  means,  limited  in  volume  only  by  the  amount  of  capital  that  may 
be  shown  and  the  amount  of  such  notes  which  may  be  floated  upon  a  con- 
fiding public.  It  should  be  evident  to  everyone  that  this  would  provide 
elasticity  in  one  direction  only,  which  would  continue  until  the  inevitable 
crisis  was  reached,  which  would  burst  the  bubble  and  destroy  the  system. 

THE  CONTRACTION  SCHOOL. 

Another  class,  which  may  be  called  the  contraction  school,  and  in  which  it 
must  be  admitted  is  included  some  of  the  most  eminent  financiers  of  the 
country,  favors  the  retirement  of  all  Government  notes  by  funding  them  into 
long-time  interest-bearing  bonds,  and  this  it  is  believed  can  be  accomplished 
by  means  of  a  popular  subscription.  Slight  consideration  seems  to  be  given 
to  the  immense  contraction  of  capital  this  plan  would  occasion  if  successful, 
and  the  severe  drain  it  would  necessarily  cause  upon  the  deposits  of  all  classes 
of  banks,  but  especially  savings  banks.  It  is  asserted  that  this  admitted  con- 
traction will  be  offset  by  the  increased  issue  of  national-bank  notes,  based  upon 
the  security  of  these  bonds;  and  the  national-currency  law  is  to  be  amended 
so  as  to  permit  of  a  larger  ratio  of  circulation  upon  the  bonds  deposited. 

It  is  by  no  means  certain  that  there  would  follow  a  largely  increased  issue 
of  bank-note  circulation.  With  the  withdrawal  of  the  legal-tender  notes  and 
the  relieving  of  the  Government  from  the  responsibility  of  maintaining  re- 
demption a  new  and  unaccustomed  obligation  would  devolve  upon  the  banks, 
that  of  redeeming  their  circualtion  in  gold.  Cautious  and  perhaps  overcon- 
servative  institutions  may  conclude  that  the  risk  would  be  greater  than  the 
possible  profits  to  be  derived,  and  decline  to  take  out  circulation,  just  as 
many  banks  now  issue  no  circulation,  although  the  liability  for  redemption 
is  reduced  to  a  minimum.  Granting,  however,  that  these  notes  may  be  sup- 
plied in  volume  equal  to  the  Government  notes  withdrawn,  what  public  in- 
terest would  be  served  by  the  substitution?  The  notes  would  still  have  for 
their  security  only  the  public  credit  represented  in  the  bonds,  and  to  the 
ordinary  mind  no  good  and  valid  reason  would  exist  for  the  transferring  of 
this  note-issiiing  privilege  to  private  corporations,  with  its  resulting  profits 
at  the  public  expense,  in  face  of  the  fact  that  it  has  heretofore  been  exercised 
directly  by  the  Government  at  a  trivial  expense  for  the  benefit  of  the  people, 
and  may  continue  to  be  so  exercised. 

WEAKNESS  OF  PRESENT  SYSTEM. 

The  foundation  for  the  proposed  changes  exists  in  the  fact  that  experience 
has  demonstrated  the  inadequacy  of  our  paper-money  system  to  meet  cer- 
tain infrequently  occurring  financial  conditions.  This  weakness  is  inherent 
with  all  paper-money  systems  that  have  heretofore  existed.  The  world  has 
not  produced  a  more  successful  system  than  our  own,  in  which  the  currency 
is  based  entirely  upon  public  credit  and  maintained  in  a  volume  which  over- 
shadows in  its  magnitude  all  other  successful  paper-money  systems.  The 
large  experience  we  have  gained  as  a  nation  during  the  years  of  paper  infla- 
tion should  enable  us  to  discern  what  is  required  to  improve  or  remove  de- 
fects, and  the  correction  should  be  applied  to  the  existings^stem,  rather  than 
at  the  first  manifestation  of  these  defects  that  we  should  proceed  to  destroy 
the  entire  financial  fabric  and  substitute  for  it  some  new  and  untried  methods. 

The  quality  of  elasticity  when  ajiplied  to  money  should  have  but  one  sig- 
nification. A  rubber  ball  is  elastic,  but  it  can  not  exceed  in  expansion  the 
limits  of  its  circumference,  although  it  may  be  contracted  at  will.  Gold  is 
the  most  elastic  of  all  currencies,  and  yet  its  aggregate  volume  can  only  be  ex- 
panded in  the  comparatively  small  amount  annually  produced,  which  is  largely 
set  by  what  may  be  lost  and  destroyed  or  used  in  the  arts  and  sciences.  In  no 
manner  can  its  value  be  increased  or  diminished  by  a  business  demand  In 
this  respect  it  is  inflexible,  and  it  is  this  quality  which  constitutes  it  the  unl- 
1905 


14 

versal  stamlard  by  which  all  othor  thiims  arc  valuod  and  exchanged.  It  holds 
the  I'litire  world  in  its  sway,  and.  roiK.iisive  to  the  great  law  of  supply  and 
demand,  it  expands  andcontra<'tsin  vohuni'in  every  market,  moving  toward 
that  in  whieli  it  is  most  needed  and  away  from  that  in  which  its  use  for  the 
time  receives  insurtieient  compiMisation. 

Every  species  of  money  is  subjeet  to  the  same  general  law,  but  the  local 
environment  of  any  i)aper  money  siiitplies  a  limit  to  its  utility  when  it  is  in 
excess  of  legitimare  ilemanil.  When  this  occurs,  ex])ortation  naturally  fol- 
lows, but  the  entire  drain  must  be  sustained  alone  by  that  portion  of  the  cir- 
culation which  is  gold,  and  this  (li'ain  will  continue  until  the  business  situa- 
tion chiuiges.  or  the  total  volume  of  currency,  including  both  gold  andi)aper, 
is  contracted  to  the  reciuirements  of  the  demand  for  it.  Our  currency  sys- 
tem is  now  being  subjected  to  the  severest  tost  of  this  character  it  has  c^ver 
sustained.  Money  finds  no  adeiinat(>  compensation  for  its  use,  and  gold  is 
exported  in  such  vulunie  that  it  causes  appreheiision  as  to  our  ability  under 
existing  laws  to  maintain  th<'  world's  standard  of  value,  which  has  prevailed 
•with  us  since  resuui])tion  in  IST'J. 

It  is  not  necessary  to  surmise  and  discuss  here  the  cause  for  this  unfortu- 
nate business  situation.  The  danger  which  threatens  our  monetary  standard, 
and  the  continual  discussion  in  favor  of  silver  remoneti/.ation  ar((  undoubt- 
edly largely  responsible  for  the  business  depression.  Init  if  our  currency  laws 
permitted  of  some  reasonable  contraction  of  our  paper  money  when  circu- 
lated in  excess  of  the  demand  for  it  the  situation  would  lie  relieved  of  its  most 
dangerous  features.  There  is  no  occasion  for  the  feai-  that  the  volume  of 
currency  may  in  ordinary  times  he  insullicient  for  the  work  it  has  to  perform. 
Emergencies' will  occur  when  this  may  seem  to  be  the  case,  but  temporary 
expedents  can  be  depended  upon  to  meet  all  such  sudden  demands,  and  the 
worlds  supply  of  gold  will  soon  restore  tne  normal  .situation. 

A  much  greater  danger  is  ])resented  from  a  redundancy,  because  in  that 
case  the  entire  system  of  prevailing  values  may  be  disastrously  affected,  not 
only  by  the  loss  of  capital  which  is  evidenced  iii  the  exportation  of  gold,  but 
also  by  the  loss  of  confidence  in  the  money  left  should  redemption  cease  or 
its  discontinuance  be  threatened.  In  my  judgment  a  few  simiUe  enactments 
will  so  improve  our  currency  as  to  qualify  it  to  perform  the  tuncrtions  of  the 
best  pai)er-money  system  that  can  be  devised,  and  tiiereby  meet  the  demands 
of  the  present  and  any  of  similar  character  that  may  hereafter  occur. 

When  this  redundancy  occurs  the  Gcjvcrnment  should  increase  the  interest 
rate  for  money  Ijy  placing  any  required  amount  of  its  circulation  upon  an 
interest  basis,  and  thereby  for  the  time  retire  it  from  circulation.  The  Bank 
of  England,  which  represents  the  British  Government,  accomplishes  the 
same  desired  results  by  a  similar  action,  except  that  its  different  circum- 
stances require  it  to  adopt  the  opposite  course  of  charging  and  receiving  the 
increased  interest  instead  of  paying  it. 

The  views  I  have  here  endeavored  to  express  can  be  practicallv  applied  in 
the  legislation  that  I  would  suggest,  and  which,  it  will  ne  noticed,  also  con- 
tains some  desired  modifications  in  minor  details,  which  require  no  special 
reference  to  recommend  them.    Congress  should  enact  as  follows: 

1.  All  Government  demand  notes  hereafter  issued  to  he  of  the  same  general 
form  and  character  (say  coin  notes  of  1S!«J)  and  no  denomination  to  be  issued 
of  less  than  $10. 

3.  Provide  for  a  gold  reserve  fund  for  the  payment  of  demand  notes  and 
the  maintaining  of  the  parity  of  our  coins  to  be.  say,  20  per  cent  of  the  de- 
mand notes  outstanding.  (This  corresponds  clost>ly  with  the  amount  of  the 
present  reserve,  based  tipon  Sonii.iXKi.iHK)  of  circulation. ) 

.'?.  Provide  that  the  total  issue  of  demand  notes  shall  at  no  time  exceed 
$5iK),()(K».00(J  (about  the  present  aggregate),  except  for  the  following  inirposes: 

(a  I  Hedemptiou  of  national-bank  notes  outstanding  (should  tlieir  retire- 
m.eiit  be  decided  upon ). 

(0}  For  use  in  emerjjencies  as  hereinafter  provided. 

4.  Provide  for  the  issue  from  time  to  time  of  interest-bearing  Treasury 
notes,  legal  tender  for  their  face  and  payable  say  in  three  years  after  date 
and  at  the  pleasure  of  the  Government  after  one  year,  with  annual  coupons 
attached.  These  notes  to  be  issm^d  only  in  payment  of  gold  for  th(!  maintain- 
ing of  the  reserve  required,  and  the  demand  notes  redeemed  to  be  retired  in 
an  amount  equal  to  the  interest  notes  issued,  and  not  reissued  except  in  pay- 
ment or  redemption  of  interest  notes. 

5.  Provide  for  the  issue  of  5-:J0  or  10-40  bonds,  to  be  sold  only  for  the  pur- 
chase of  gold  for  the  reserve,  should  the  Government  be  unable  to  obtain 
gold  by  the  sale  of  interest  notes. 

6.  Should  it  be  decided  to  retire  the  national  currency,  authorize  the  re- 
demption of  the  bonds  held  by  the  banks  at  their  present  worth,  figured  at  an 
equitable  rate  of  interest,  payment  to  be  made  in  demand  notes. 

7.  Authorize  the  issue  oi  demand  notes  in  emergencies,  to  be  used  in  the 
purchase  of  interest-bearing  clearing-house  certificates,  issued  by  associa- 

190.5 


15 

tions  in  central  reserve  cities,  as  proposed  in  Senate  bill  484,  introduced  by 
Senator  Manderson  at  the  called  session  of  1893. 

8.  Provide  that  the  Treasury  shall  pay  the  expense  of  transmission  for  re- 
demption upon  all  mutilated  and  unlit  notes  for  circulation,  so  that  not  only 
a  sound  but  a  clean  currency  may  be  guaranteed. 

With  the  exception  of  the  suggested  retirement  of  national-bank  notes,  no 
radical  proposition  is  conveyed  m  these  suggestions,  and  the  entire  plan  is 
in  harmony  with  the  existing  currency  system. 

SILVER. 

It  will  be  noticed  that  nothing  is  said  concerning  silver.  It  may  be  assumed 
that  the  legal-tender  portion  of  the  scheme  being  adjusted,  the  existing  vol- 
ume of  silver  dollars  and  certificates  can  be  easily  maintained  at  par  in  the 
future  as  they  have  been  dui'ingthe  past,  the  law  requiring  parity  to  be  main- 
tained remaining  unrepealed.  The  i-equirement  of  a  lai-ge  gold  reserve  and 
the  maintaining  in  circulation  of  a  large  volume  of  gold  is  directly  in  the  in- 
terest of  silver.  What  we  gain  and  hold  of  gold  is  lost  to  the  balance  of  the 
world,  and  the  loss  will  eventually  so  affect  foreign  sentiment  that  the  use  of 
silver  will  be  increased,  its  price  will  be  raised,  and  eventiially  we  may  hope 
a  return  will  be  made  throughout  the  world  to  the  old  bimetallic  system, 
either  at  the  old  ratio  or  some  ratio  at  which  both  coining  and  commercial 
parities  of  the  metals  may  be  maintained.  The  use  of  silver  will  be  increased 
by  the  provision  limiting  notes  to  denominations  of  $10  and  upwards.  The 
same  provision  may  also  be  extended  to  embrace  the  silver  certificates. 

NATIONAL-BANK  NOTES. 

It  may  be  said  concerning  national-bank  notes  that  they  have  at  no  time 
fulfilled  the  funations  of  a  bank  currency,  as  understood  and  practiced  else- 
where. Redemption,  except  in  the  case  of  mutilated  notes,  has  carried  with 
it  so  slight  an  obligation  that  it  can  scarcely  be  considered  a  liability.  These 
notes  constitute  simply  one  form  of  Government  currency,  no  better  and  no 
worse  than  similar  currency  issued  direct  from  the  Treasury,  and  were  origi- 
nally authorized  for  the  sole  purpose  of  giving  additional  value  to  Govern- 
ment bonds,  which  at  that  period  needed  every  aid  that  coiild  be  devised. 
That  use  having  long  since  terminated,  no  good  reason  remains  for  their  con- 
tinued existence.  Should  it  be  decided  to  retire  them,  this  need  not  in  any 
manner  affect  the  continued  existence  of  our  excellent  national-banking  sys- 
tem, which  requires  no  circulation  privilege  to  sustain  its  popularity.  The 
equitable  method  suggested  for  dealing  with  the  banks  for  their  bonds 
would  induce  them  to  retire  their  circulation  in  their  own  interest,  and  no 
actual  loss  to  the  Government  would  result  from  the  adjustment. 

HENRY  W.  YATES,  Omaha,  Nebr. 

Dear  Sir:  In  order  to  prescribe  remedies  intelligently  for  the  disturbances 
to  our  system  of  banking  and  currency  and  the  loss  of  gold,  it  is  well  to  un- 
derstand the  causes  of  the  disturbances.  The  country  had  very  little  diffi- 
culty with  this  subject  until  the  people,  becoming  dissatisfied  with  a  manage- 
ment of  national  affairs  that  took  the  reins  of  Government  when  it  was  neces- 
sary to  pay  13  per  cent  interest  on  borrowed  money,  and  so  conducted  busi- 
ness that  it  could  be  borrowed  at  2i  per  cent,  and  during  the  same  period 
paid  off  one  and  a  half  billion  dollars  of  the  national  debt,  mcreased  the  per 
capita  circulation  of  money  from  $13.85  to  §34.44  and  added  over  $500,(K)0.000  of 
silver  to  our  stock  of  money,  and  exercised  their  right  to  change  the  manage- 
ment. 

Since  the  new  management  was  installed,  the  expenditures  of  the  Govern- 
ment have  exceeded  its  income  some  $125,000,000,  thus  compelling  the  use  of 
the  surplus  and  the  borrowing  of  money  by  the  sale  of  bonds  to  pay  the  help 
and  other  expenses,  the  same  as  an  individual  would  be  compelled  to  do,  con- 
ducting business  at  a  loss. 

Then  the  demonstrated  incapacity  of  the  new  management  to  do  business, 
with  the  immatured  ideas  of  some  of  the  hired  men  in  Congress,  who,  judg- 
ing from  their  actions,  think  the  Almighty  made  some  mistakes  which  they 
would  correct  by  amending  or  changing  natural  laws,  and  arguments  along 
this  line  have  caused  a  fear  in  the  minds  of  holders  of  securities  at  home  and 
abroad  that  they  may  be  paid  in  depreciated  dollars,  and  naturally  forced 
them  to  realize  without  delay  in  order  to  bo  sure  of  receiving  as  good  dollars 
as  they  parted  with.    This  is  another  disturbing  factor. 

Another  thing.  The  people  of  the  United  States  pay  for  travel,  freights, 
interest,  and  profits,  in  foreign  lands  and  to  foreigners,  at  a  conservative 
estimate,  $350,000,000  annually,  which  amount  exceeded  the  balance  of  trade 
in  our  favor  for  1894  $96,000,000,  that  had  to  be  paid  in  gold,  and  is  a  further 
cause  of  trouble. 

These  are  the  conditions  that  must  be  met.  The  deficit  in  the  national 
Treasury  is  the  chief  cause  of  the  disturbance,  and  is  increasing  the  national 
1905 


16 

debt,  and  no  theory  or  argiinient  will  disprove  or  change  that  fact.  Without 
regard  to  previous  coiulit  ion  of  servitude  in  ]iartisaii  ])olitics,  the  experience 
of  the  past  two  years  has  ad<leii  to  the  general  stoek  of  knowledge.  The 
people  Knew  some  things  before  that  they  do  not  know  now,  and  know  some 
things  now  that  tht-y  did  not  know  before. 

Someone  has  said  that  'Wise  men  sometime.^  change  their  minds,  mules 
never."  The  prople  hiing  wise  havi' changed  theii- minds,  and  last  Novem- 
ber commeni'cci  to  apply  the  remedy.  As  it  will  takesonie  tim»>  to  secure  the 
full  benefit  of  this  awakening,  the  recovery  nught  be  hastened  if  the  jn-e.sent 
management  would  ]ironii)tly  provide  suflicient  income  to  meet  e:^enses. 
I'ntil  this  is  accomi>lished,  money  must  be  borrowed  to  meet  them.  There  is 
absolutely  no  other  way  if  we  >  (nitinue  business. 

This  deficit  has  developed  a  seeming  defect  iu  our  financial  system.  But  is 
the  defect  in  thi>  system?  If  thi.'  (•J'*vernment  continues  in  the  general  bank- 
ing busiuessandkeejison  going  in  the  hole  eight  million  or  thereabouts,  every 
month.no  syhtiunof  banking  ever  invented  could  meet  the  case  so  long  as  the 
deficit  stares  us  in  the  face. 

The  CJ^overnment  or  an  individual,  as  a  banker  having  outstanding  paper, 
demand  or  othi-rwise.  must  meet  it  on  presentation  or  bo  discredited,  and 
when  business  is  at  a  standstill  and  distrust  abroad  in  the  land,  the  creditors 
are  apt  ft)  want  their  money,  and  as  a  general  proposition  they  are  in  some- 
what of  a  hurry  for  it. 

An  individual  running  behind  $8,000,000  or  $8,000  a  month  would  be  in 
trouble,  and  his  only  recourse  after  exchanging  his  surplus  would  be  to  bor- 
row money,  which  he  may  be  able  to  do  until  such  time  as  his  income  catches 
up  to  his  expenditures.  IJut  su])]iosi'  the  creditors  of  the  individual,  also  in- 
terested in  other  directions,  should  learn  through  some  of  the  hired  men  that 
the  individual  was  considering  the  advisability  of  departing  from  his  former 
conservative  methods  in  business  and  was  disposed  to  resort  to  sharp  or  dis- 
honest practices,  the  situation  would  be  greatly  aggravated,  and  if  persisted 
in  might  result  in  disaster.  Is  not  this  about  the  position  the  Government  is 
in  at  the  present  time?  The  fact  that  the  Government  is  rich  and  able  to 
pay  its  debts  is  not  satisfying  to  the  financial  world,  if  we  propose  to  juggle 
things. 

It  is  generally  conceded  that  we  have  too  many  kinds  of  money  issued 
under  various  laws  and  that  our  banking  and  currency  laws  should  be  re- 
visi-d,  and  some  think  that  the  Government  should  go  out  of  the  general 
banking  business.  This,  however,  is  not  a  good  time  for  such  revision.  Too 
much  grief  at  any  one  time  is  discouraging  and  disheartening.  When  the 
time  comes  for  action  on  this  sub.i(>ct  I  can  give  vou  the  names  of  individuals 
who  will  tell  you  just  what  should  be  done.  1  am  not  quite  so  clear,  but 
there  are  a  few  general  ])roi)ositions  that  may  be  stated. 

First.  The  people  want  all  of  the  dollars  of  equal  value  in  circulation  that 
it  is  possible  to  secure. 

Second.  The  dollars  of  whatever  character  in  circulation  in  the  hands  of 
the  common  people  must  have  behind  them  an  [absolute  guaranty  ithat  they 
are  equal  in  value  to  every  other  dollar  to-day  and  will  continue  to  be  any- 
where in  the  United  States  next  week  or  next  year. 

Third.  The  largest  use  of  silver  consistent  with  safety  should  be  incorpo- 
rated into  the  revision  of  the  system. 

Fourth.  Gold  is  now  the  measure  of  value,  and  it  should  so  remain,  unless 
it  is  desired  to  contract  the  money  of  the  country,  an  amount  equal  to  the 
gold  money  in  the  country.  A  free  coinage  of  silver  would  bring  about  that 
result.  The  fundamental  law  of  coinage  is  thus  stated  in  a  pamphlet  published 
in  IGDC:  "  When  two  sorts  of  coin  are  current  in  the  same  nation  of  like  value 
by  denomination,  but  not  intrinsically  (i.  e.,  in  market  value),  that  which 
has  the  least  value  will  be  current  aiid  the  other  as  much  as  possible  will 
be  hoarded  or  melted  down  or  exported."  This  is  just  as  natural  as  that 
water  will  run  down  hill. 

The  >)est  way  to  formulate  these  propositions  into  law  must  be  solved  by 
our  representatives  in  Congress. 
Very  truly,  yours, 

L.  D.  RICHARDS,  Fh-emont,  Nebr. 

Hon.  E.  J.  Hainer,  Washington,  D.  C. 
1905 


:^3  or 


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